Fed Holds Rates Steady as Middle East Tensions Hit Oil, Crypto

The Federal Reserve kept its benchmark interest rate at 3.50%–3.75% at the Federal Open Market Committee meeting on Wednesday, holding policy steady for a third straight meeting. Officials pointed to conflict in the Middle East as a source of economic uncertainty, with the Fed’s statement noting “a high level of uncertainty about the economic outlook.”

The FOMC paused after several months of increases aimed at slowing inflation. The committee did not add language that would clearly indicate an expectation of easier policy in coming months. Governor Stephen Miran pressed for a 25 basis-point cut; a majority of officials preferred to keep rates unchanged. Three governors supported holding the policy rate but declined to endorse wording that suggested a near-term easing bias.

Cryptocurrencies slipped after the Fed announcement. CoinGecko data showed Bitcoin down about 1.4% over the past 24 hours, trading near $75,100, while Ethereum fell about 2.3% to roughly $2,240. Traders currently price in stable rates through December, according to CME FedWatch.

The rate decision came as the Senate Banking Committee advanced Kevin Warsh’s nomination to lead the central bank, sending the nomination to a full Senate vote. Jerome Powell’s eight-year term as chair ends next month; he has indicated he would serve as “chair pro tempore” if Warsh is not confirmed by May 15 and that he may remain a Fed governor.

The Justice Department recently closed a criminal investigation into Powell over alleged cost overruns on a Federal Reserve building renovation, removing an obstacle to confirmation votes. Senator Thom Tillis had pledged to block votes until the probe ended, calling the investigation “bogus.”

Disclosure filings show Warsh, with a reported net worth near $100 million, holds investments tied to the crypto sector, including Solana and Polymarket. He has publicly criticized many crypto projects as fraudulent or worthless while expressing support for Bitcoin.

Officials cited higher energy costs as a factor in their caution. Disruptions to shipping through the Strait of Hormuz, which handles about 20% of global oil flows, have pushed U.S. fuel prices higher. AAA reported the national average price for a gallon of gasoline at $4.22 on Wednesday, a 6.2% increase from a month earlier and up from about $2.99 around the time the regional conflict escalated.

Policymakers said they will monitor upcoming inflation readings, labor market data and developments in energy and global trade routes before changing policy. Markets and investors are watching economic reports and geopolitical events for signals on the Fed’s next steps.