Cryptocurrency prices wavered Wednesday as investors parsed commentary from the Federal Reserve that provided new insight into the U.S. central bank’s fight against inflation.

Policymakers’ move to leave interest rates unchanged for an 11th consecutive month was a foregone conclusion, based on movements in Fed futures markets. At its most restrictive position in over 20 years, the Fed kept its benchmark borrowing rate at a range between 5.25% and 5.50%.

This month’s release of a so-called “dot plot,” however, suggested shot callers at the U.S. central bank have seen a notable shift in financial conditions since March. The Fed in its most recent Summary of Economic Projections had penciled in three rate cuts through years-end.

The dot plot released Wednesday suggested Fed policymakers now think one rate cut could be more appropriate—interpreted by the market as a hawkish sign. The projection went beyond the two rate cuts that economists had expected the Fed could telegraph, as it looks to keep rates higher for longer in the face of a strong economy and U.S. labor market.

Cryptocurrency prices had risen earlier in the day on news that inflation had slowed to 3.3% in the 12 months through May. The report indicated that consumer prices for American goods and services rose slightly less last month than economists had expected.

Following the Fed’s announcement, Bitcoin and other cryptocurrencies fell. Just 15 minutes after the Fed’s move, for example, Bitcoin’s price swiftly fell 1.2% to around $69,000 from $69,900. Meanwhile, the prices of Ethereum and Solana also ticked down at similar rates.

The Fed has maintained in recent months that it will not cut rates until it has “gained greater confidence that inflation is moving sustainably toward 2%.” Federal Reserve Chairman Jerome Powell affirmed that stance on Wednesday and said, “So far this year, the data have not given us that greater confidence.”

“Recent indicators suggest that economic activity has continued to expand at a solid pace,” Powell added in a statement. “In recent months, there has been modest further progress toward the Committee’s 2% inflation objective.”

Before the conclusion of the Fed’s policy meeting, futures traders penciled in a 61% chance that the Fed cuts rates in September, likely delivering a boost to the U.S. economy through lower borrowing rates. That figure fell to 59% following the release of Powell’s written remarks.

Not long before U.S. inflation peaked at 9.1% in June 2022, the Fed began lifting interest rates from near-zero to cool a red-hot economy. While inflation has come down significantly since then, Powell affirmed Wednesday that the U.S. central bank’s quest to 2% isn’t over yet.

Powell pointed to Wednesday’s Consumer Price Index report, where inflation was flat on a month-to-month basis in May, as a sign of potential progress. “Let me say that we welcome today's reading and hope for more like that,” he said.

“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” Powell added, of which one is “maximum employment” among U.S. workers.

The price of so-called risk assets, including stocks and crypto, typically face pressure as interest rates rise and the payouts on holding cash and U.S. Treasuries become more attractive. Investors anticipate the opposite would happen as the Fed loosens U.S. monetary conditions.

Edited by Andrew Hayward