The Federal Reserve left policy unchanged, sounding more cautious than expected about a rate cut in September

As expected, the Federal Reserve left its benchmark federal funds rate range unchanged at 5.25% to 5.50%. Somewhat surprisingly, however, the Fed did not offer much assurance on a rate cut in September.

"Inflation has eased over the past year, but remains somewhat above ideal levels," the Fed said in its policy statement. "The economic outlook is uncertain and the [Federal Open Market Committee] remains alert to risks on both sides of its dual mandate."

Bond yields and the dollar rose slightly in the minutes following the release of the more hawkish than expected statement, but both remained lower on the day. The price of Bitcoin (BTC) fell to $66,550, but still rose slightly over the last 24 hours. U.S. stocks rose sharply in the day's trading, with the Nasdaq up 2.4 percent and the S&P 500 up 1.6 percent.

Faced with soaring inflation at the time, the Fed embarked on a historic series of tightening policies in early 2022, raising the federal funds rate from 0% to a range of 5.25% to 5.50%, a process that was completed in less than 18 months. That rate has remained unchanged for more than a year as inflation has remained firmly above its 2 percent target and the Fed has remained cautious about easing policy.

According to CME FedWatch, before the meeting, the market had fully expected the Fed to cut rates by at least 25 basis points at its mid-September meeting. Looking ahead, the market is pricing in a nearly 60% chance of a 75 basis point rate cut at the Fed's last meeting in mid-December 2024.

At the post-meeting press conference, Fed Chairman Jerome Powell said recent data showed inflation was moving closer to its 2 percent target. While no final decision has been made on September's decision, he said "the general feeling is that we are edging closer" to a rate cut.