Bitcoin moved lower after the Federal Reserve kept interest rates steady and warned that inflation may stay uncomfortable for longer. March CPI, the main U.S. consumer inflation number, rose 3.3% from a year earlier and 0.9% from February, helped by a sharp rise in energy prices tied to the Iran war.
Key Takeaways
- The Fed held its policy rate at 3.5% to 3.75% for the third meeting in a row.
- March CPI rose 3.3%, while PCE inflation, the Fed favorite inflation gauge, may come in around 3.5%.
- Bitcoin fell from about $76,100 to near $75,000 soon after the rate decision.
Powell Keeps Rate Cut Hopes On Hold
For Bitcoin, the problem is simple. Higher inflation usually makes rate cuts harder. When rate cuts look less likely, traders often pull money away from risk assets, including Bitcoin.
Energy caused much of the new inflation fear. Data for March showed energy prices up 12.5% from a year earlier, while gasoline rose 18.9% and fuel oil climbed 44.2%. Producer prices also rose 4.0% year over year in March, the largest annual increase in three years, even though the monthly number came in below forecasts.
The Fed also changed its language. For months, it called inflation “somewhat elevated.” After the latest meeting, it called inflation “elevated.” That small wording change matters because central banks use careful language when they want markets to hear a warning. Barron reports that the Fed also kept rates at 3.5% to 3.75% and saw four dissents, the highest number since 1992.
Powell said:
“The rise in energy prices has not even peaked yet. Short-term inflation expectations have risen.”
PCE inflation is the next key number. PCE stands for Personal Consumption Expenditures. It tracks prices across goods and services and gives the Fed a broader inflation view than CPI. The latest official BEA data showed February PCE inflation at 2.8%, with the March release due April 30. Several forecasts now point to March PCE around 3.5% to 3.6%, well above the Fed goal of 2%.
That explains why markets no longer sound confident about near-term rate cuts. Kalshi pricing, cited in the original report, put the chance of a rate cut before 2027 near 50%, down from 80% to 90% earlier in 2026.
“What happens in the next 30 to 60 days can change things,” Powell noted.
Bitcoin felt that uncertainty quickly. After the Fed decision, BTC dropped in about ten minutes from $76,100 to around $75,000. It is currently back up and trading at $75,700, according to CoinMarketCap data.
Powell also addressed his own future. His term as Fed chair ends in mid-May, but he said he plans to stay on as a governor for a while. Reuters also reported that Powell said he would remain on the Fed board after his chair term ends. “I leave when I think it is appropriate,” he said. He added that he will stay “for a time” as a board member and said he is “literally staying because of the actions of the administration.”
Powell also criticized legal pressure from the Trump administration, saying:
“My concern is about a series of legal attacks on the Fed. These legal actions by the administration are unprecedented. I fear these attacks are battering the institution.”
In summary, Bitcoin can trade like a macro asset when the Fed, inflation, oil prices, and the U.S. dollar dominate the day. Lower rates can help Bitcoin because cash becomes less rewarding and investors often take more risk. Higher inflation, delayed rate cuts, or stronger energy shocks can do the opposite, at least in the short term.