The Federal Reserve left its benchmark interest rate target unchanged at 4.25% to 4.50% as expected Wednesday, as the U.S. central bank navigates a tenuous economic climate. 

The uncertainty has sent major stock indexes including the S&P 500, Nasdaq 100, and Russell 2000 into correction territory, or worse, in recent weeks. Bitcoin has not been immune, as the $1.68 trillion asset is down 10.82% year-to-date and nearly 20% from its all-time high above $108,000 in late January. The overall crypto market has lost 16.04% this year and nearly 24% from its all-time high.

“Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate,” the Federal Open Market Committee said in a statement.  

Bitcoin fell 0.62% in the minutes after the announcement.

In holding rates steady, a decision market watchers widely expected, the Fed is contending with stubborn inflation that remains above its 2% target and declining job growth numbers at a time when the U.S. government under Elon Musk’s Department of Government Efficiency (DOGE) is enacting massive layoffs across federal agencies. 

“The economy heading into this year was on solid footing, but all the policy uncertainty, including trade policy, immigration, fiscal, causes businesses to pause,” says Ryan Sweet, chief U.S. economist at Oxford Economics. “So they freeze hiring or cut back on business investment equipment … and that can have a choking effect on the broader economy.” 

Additionally, it is difficult to predict U.S. trade policy under President Donald Trump, who has threatened massive tariffs against the country’s biggest trading partners such as Canada, Mexico, the European Union, and China, only to quickly reverse course. Goods coming into the U.S. from China are subject to a 20% tariff and on April 2, a date that Trump has referred to as a “liberating day for our country,” a one-month extension will expire for goods compliant with the North American trade deal, known as USMCA, negotiated during his first term.

Federal Reserve Chair Jerome Powell, who will be hosting a press conference at 2:30 pm EST, faces a tough job in calming markets amid all of this uncertainty, according to Sweet. “The Fed’s got to acknowledge that the economy has lost a little bit of momentum, but they’re not going to raise alarm bells that we’re at serious risk of a recession,” he said. 

The most important factor that the Fed should consider in future rate decisions is the weakening, but still strong, labor market, Sweet said. “[That’s] your line of defense between an economy that’s slowing down and one that falls into a recession.”

The FOMC, the Fed’s rate-setting body, is expected to hold rates steady again at its next meeting in early May, according to CME’s Fedwatch tool. However, the market expects two more 25 basis point cuts through the end of the year, bringing the targeted Federal Funds rate down to 3.75% to 4.25%.