The Federal Reserve held its benchmark interest rate steady at 3.50% to 3.75% on June 17, but the real story is what comes next. Nine out of 18 FOMC participants now project at least one rate hike before the year is out, a dramatic shift from the cutting cycle that defined much of 2025.
Bitcoin responded the way Bitcoin responds to hawkish Fed signals. It dropped roughly 1.5% after the announcement, trading near or below $65,000.
From cuts to hikes: the Fed’s policy U-turn
Just last year, the Fed was actively lowering rates. A series of 2025 cuts brought the federal funds rate down to its current range, aimed at cushioning the economy while inflation appeared to be cooling.
Minutes from the April 2026 FOMC meeting revealed that a majority of members agreed on the need for “policy firming” if inflation continues to exceed the 2% target. Persistent inflation pressures, partly driven by geopolitical developments in the Middle East, have complicated the Fed’s path forward. The US-Iran peace process has intermittently eased concerns about energy costs, but oil price volatility tied to the region continues to feed into broader inflationary dynamics.
