Key takeout
The Federal Reserve maintained an unchanged federal fund rate between 4.25% and 4.50%. According to BlackRock, the recession could benefit Bitcoin due to increased fiscal spending and increased financial stimulus.
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The Federal Reserve held interest rates unchanged today, maintaining a federal funding rate of 4.25% to 4.50% in its second consecutive meeting amid growing concerns about a recession supported by the Trump administration’s economic policies.
The central bank adjusted its economic forecast for 2025 to 1.7% from the past 2.1% in December, while also increasing its unemployment forecast from 4.3% to 4.4%, 2.5% to 2.5% to 2.7%, and core PCE inflation from 2.8% to 2.8%.
The Fed forecasts two 50-based interest rate cuts in 2025, consistent with both market expectations and December forecasts.
This decision coincided with broad market expectations. CME Group’s FedWatch tool shows a 99% chance that the Fed will maintain its current target interest rate, reflecting near-non-permanent market confidence in the outcome.
In a statement from the FOMC, the central bank highlighted the resilient labor market but expressed concern about sustained inflation and global economic challenges. The Fed has shown that it will monitor inflation and labor market data carefully before adjusting its policy.
Fed Chair Jerome Powell repeated this cautious approach last month, noting a strong economy that still doesn’t justify change.
With his press conferences a few separate times, the market is clear on the conditions that could drive future rate movements and how the Fed will increase economic risks.
Powell’s speech was expected to be clear.
This Wednesday’s meeting was the first since Trump’s trade policy was enacted for China, Mexico and Canada.
The Fed had already flagged these tariffs at its January meeting as a source of uncertainty.
Economists warn that Trump’s tariffs could reverse recent inflation progress, as they could raise consumer prices, lead to retaliation and strain the economy.
US inflation data supports a cooling trend in the consumer price index, rising 0.2% in February, bringing the annual rate down from 3% to 2.8%.
In an interview with Maria Bartiromo from Fox News, Trump did not rule out the possibility of a recession. Scott Becent’s Treasury Department said on March 10 that it cannot guarantee that the US will dodge one, in addition to concerns about the recession.
Powell’s upcoming statements are poised to address these risks of tensions, wages, inflation and recession.
The rate decisions met expectations, so his words could have extra weight and shape market sentiment about whether Trump’s policies could lean the economy towards sluggish territory.
Bitcoin could thrive in a recession despite the fear of the short-term market: BlackRock
I’ll talk about Bitcoin as a concern over the heavy tariffs and the recession.
Robbie Mitchnick, the global head of digital assets at BlackRock, sees the recession as a potential catalyst for Bitcoin, saying it could see liquidity and monetary stimulus.
“Bitcoin is a long liquidity within the system. It is catalyzed by fiscal spending and accumulation of debt and deficits. It happens in a recession,” he occurred during Yahoo Finance’s market domination on Tuesday. “It’s catalyzed by low interest rates and financial stimuli.”
Comparing Bitcoin with Gold, Mitchinik explained that while Bitcoin is fundamentally an uncorrelated asset, market sentiment can generate short-term price correlations.
He argued that Bitcoin should act as a global, decentralized, non-sovereign asset similar to digital gold, but acknowledged that short-term interest rate expectations and investor sentiment could affect its price.
Despite recent market pullbacks, Bitcoin has risen by around 15% since the beginning of November.
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