Fed Goes 10-2, $BTC Holds Its Nerve: The Dissents Are Doing the Talking

The Federal Reserve held interest rates at 3.75% to 4.00% on Wednesday in a 10-2 vote, keeping its policy range unchanged after a 25 basis point increase in September. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of another quarter-point hike. The September decision was unanimous 12-0 and marked the Fed’s first rate increase since 2023.

“The Federal Reserve held rates steady as expected,” with CME FedWatch showing about a 90% probability of no change before the announcement. Another premeeting snapshot placed the probability of an unchanged rate at 92.8%, compared with 7.2% for a 25 basis point increase, while futures priced an 84% chance of a hike at the Dec. 8-9 meeting.

The Fed said, “Economic activity is expanding at a strong pace,” upgrading its description from the solid pace cited in September. It added, “Job gains have kept pace with the workforce, and the unemployment rate has changed little.” On inflation, the Committee said, “Inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal. The Committee will deliver price stability.” The September statement had said the rate move “will support a timelier return” to the goal.

Bitcoin barely moved after the 2 p.m. ET announcement, edging up about 0.2% to roughly $80,950. It briefly reached $81,185 on Binance, according to TradingView, and earlier poked above $81,600 before slipping below a resistance zone between $81,000 and $82,500. Gold dipped 0.1% to about $4,036 an ounce.

The backdrop included inflation at 3.7% over 12 months through September, with gasoline rising 9.1% in the month, and U.S. crude settling at $99.90 a barrel on Tuesday. The 10-year Treasury yield closed Tuesday at 4.99% after peaking at 5.31% on Oct. 5. Former Fed Vice Chair Alan Blinder described the policy challenge as being “stuck between the proverbial rock and a hard place,” while Chicago Fed President Austan Goolsbee said, “The Fed is moving with caution instead of the conviction we saw in 2022.” After Fed Chair Kevin Warsh’s August Jackson Hole speech, about $481 million in crypto positions were liquidated within 24 hours.

Fed Chair Kevin Warsh faces reporters at 2:30 p.m. ET, and the Personal Consumption Expenditures (PCE) price index is due Thursday. Other policy decisions include the Bank of Canada’s rate of 2.5%, the Bank of Japan’s decision on Friday and fresh Fed projections in December. The decision also came ahead of next week’s US midterm elections, with $BTC and other risk assets watching the next inflation data and the Committee’s two dissenting votes.