Fed Hits Pause Again, Hawkish Dissent Hints the Pause May Be Lying 🦅

The Federal Reserve held its benchmark federal funds rate steady at 3.50%–3.75% on Wednesday, marking the fifth consecutive FOMC meeting without a change and leaving crypto markets to digest a muted reaction as attention turned to Chair Kevin Warsh's press conference. The vote was 9–3 in favor of holding, with Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan dissenting in favor of an immediate 25-basis-point hike, the most hawkish bloc of dissents of Warsh's tenure as chair. Warsh, appointed by President Trump, presided over his second meeting since succeeding Jerome Powell.

The Committee's policy statement said the economy is "expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East," while noting that "inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy." No Summary of Economic Projections accompanied the decision, meaning no fresh dot plot was released; the next set of projections is due at the September 16, 2026 meeting. Nearly half of FOMC members signaled at the June meeting they would support a rate hike before year-end, and CME FedWatch data showed futures markets had priced roughly a 65% probability of a hold and 35% odds of a quarter-point increase ahead of the decision.

Bitcoin dipped around 1% to $63,890 in the immediate aftermath of the announcement before climbing above $64,400 later in the session, up over 1% over 24 hours. Ethereum fell by roughly 1% to just above $1,900. The broader market response remained contained even as equities trimmed earlier losses and oil climbed nearly $4 to $83 on reports of joint U.S. and Saudi Arabian retaliatory strikes on Iranian-backed forces in Iraq that killed at least 20 people. The S&P 500 and Nasdaq bounced, while gold rose 1.2% on the day. The Fear & Greed Index sat at 29, deep in "fear" territory, as the crypto market held in a waiting pattern.

Michael Reynolds, Vice President of Investment Strategy at Glenden, pointed to continuity between Powell and Warsh, stating, "There is a significant degree of continuity between the two chairmen." Warsh has pledged to share less forward guidance than his predecessors, and investors were watching his 9:00 PM ET press conference for clues on the policy path. The next FOMC decision is scheduled for September 16, 2026, when the Committee will publish updated economic projections and a new dot plot.