At its policy meeting that concluded on July 29, the Federal Reserve decided to maintain the target range for the federal funds rate at 3.50% to 3.75%. However, the decision was not unanimous, with three officials advocating for a 25-basis-point rate hike, indicating significant internal disagreements within the Fed regarding inflation and the future direction of policy.

The resolution was passed 9 to 3.

The Federal Open Market Committee voted 9-3 to keep interest rates unchanged. The three officials who supported a rate hike were Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan.

This marks the first time since September 2016 that three policymakers have disagreed with the interest rate decision on the same front. The Federal Reserve stated that U.S. economic activity continues to expand at a "solid pace," with job growth broadly in line with the size of the labor force and the unemployment rate remaining largely unchanged.

The expectation of a September rate hike has risen to 62%.

Despite choosing to hold rates steady at this meeting, disagreements among officials have led the market to reassess the policy direction for the next meeting. The CME FedWatch tool shows that market expectations for a 25 basis point rate hike by the Federal Reserve in September have risen to 62%.

Ian Lyngen, head of U.S. interest rates at BMO Capital Markets, said the vote reflects the continued strength of hawkish voices within the Fed. The report also noted that Fed Chairman Kevin Warsh did not provide a clear signal on the next steps after the meeting, instead emphasizing that future decisions would depend on future economic data.

Bitcoin rises in the short term

Following the interest rate decision, crypto assets briefly rose. Bitcoin surged by about 1.25%, reaching nearly $64,400; Ethereum also edged up, trading at around $1,911.

However, institutional funds have not yet shown a significant return. The spot Bitcoin ETF has seen net outflows for four consecutive trading days, with a cumulative outflow of $527 million, including a single-day net outflow of approximately $49.75 million on July 29.

This means that the Fed's pause in raising interest rates provides a short-term buffer for risk assets, but the funding situation has not yet improved in tandem, and the crypto market is still waiting for clearer macroeconomic and funding signals.