Especially the inflation data to be released in the US, the Federal Reserve’s (Fed) interest rate decision, and tensions in the Middle East are among the topics closely followed by investors. How will Bitcoin and cryptocurrencies react?

Fed Meeting and Interest Rate Decision

The most important development of the week will be the Fed’s monetary policy meeting. Markets are focused not only on the central bank’s decision regarding interest rates but also on Fed Chair Jerome Powell’s statements.

Expectations in the futures market indicate that the Fed will not make any changes to interest rates at this meeting. According to current forecasts, the probability of rates remaining unchanged is quite high.

Nevertheless, investors will closely monitor Powell’s assessments, particularly regarding the impact of developments related to Iran on energy prices and inflation. Concerns that rising energy prices could increase inflationary pressure have already weakened rate cut expectations.

Inflation Data and Economic Indicators

The Producer Price Index (PPI) data for February, to be released on Wednesday, also holds critical importance for the markets. This data can provide important signals about inflation trends as it reflects changes in production costs.

Analysts state that the PPI data is not expected to have a strong enough impact to change the Fed’s current tight monetary policy stance. Nevertheless, every new inflation indicator continues to influence rate expectations.

Later in the week, the Philadelphia Fed Manufacturing Index and January new home sales data will be released. These indicators can provide additional clues about the overall health of the US economy.

Bitcoin Solid Stance: Middle East Tensions

In addition to economic developments, geopolitical risks are also on the markets’ agenda. Over the weekend, it was reported that the US carried out an attack on Iran’s Harg Island region, which is critical for the country’s oil industry.

Following this development, oil prices rose again, reaching approximately $100 per barrel. The increase in energy prices is seen as an important factor that could affect global inflation expectations.

On the other hand, US President Donald Trump is expected to announce the formation of a joint naval security coalition with certain countries to escort ships passing through the Strait of Hormuz.

The fact that all these developments are occurring within the same week is creating an environment of increased uncertainty in financial markets. Therefore, both upcoming economic data and geopolitical developments are evaluated as likely to lead to higher short-term fluctuations in the crypto markets.

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Recent increases in geopolitical risks and their potential impact on inflation are causing expectations about monetary policy to be reconsidered.

Inflation Concerns Back on the Agenda! Rate Cut Cancelled?

Ongoing conflicts between the US and Iran have reignited discussions about inflation risks in global markets. Possible effects on energy prices and global supply chains are strengthening concerns that price pressures could increase.

These developments may lead the FED to adopt a more cautious stance on interest rate policy. Analysts note that if geopolitical risks create upward pressure on inflation, monetary policy could remain tighter.

JPMorgan: The Rate Cut Cycle May Have Ended

According to a report in South Korea-based Maeil Business Newspaper, JPMorgan has updated its expectations regarding the FED’s interest rate policy. Based on evaluations included in a report published by the New York office of the Bank of Korea, the bank believes that the US rate-cutting cycle may have ended in December.

JPMorgan had previously raised the possibility of limited rate cuts in 2026. However, following recent developments, the bank now states that it does not expect any rate cuts this year.

Interest Rates Expected to Remain Unchanged

According to the new projection shared by the bank, the FED’s policy rate is expected to remain steady in the 3.5% to 3.75% range throughout 2026. JPMorgan believes there is a possibility that inflation will remain above the FED’s target level in the foreseeable future.

For this reason, a rapid easing of monetary policy is not anticipated. On the contrary, if inflation remains persistently high, a different policy path could come into focus.

Rate Hike Scenario for 2027

Another striking point in JPMorgan’s assessment is the potential for a future rate increase. The bank forecasts that the FED’s next move could be a rate hike in 2027, potentially pushing the policy rate back up to the 4% level.

This scenario indicates that a prolonged tight policy stance could continue.

Differing Expectations in the Market

Meanwhile, there are also varying views in financial markets regarding the FED’s interest rate path. While institutions such as Citi and TD Cowen expect three rate cuts this year, Barclays, Bank of America, Goldman Sachs, Morgan Stanley, Nomura, and Wells Fargo forecast two rate cuts. Deutsche Bank believes there could be only a single rate cut during the year.

These differing forecasts show that uncertainties in the global economy and the inflation outlook remain contentious in terms of their impact on monetary policy. Data and economic indicators to be released by the FED in the coming period will play a critical role in determining the direction of interest rate policy.

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He suggested that a cumulative rate reduction of around one percentage point during the year could represent a reasonable policy trajectory. Miran also noted that continuing the rate-cutting process at the Federal Reserve’s March meeting would likely be an appropriate step given the current data.

Geopolitical Tensions Have Not Changed the Outlook

Despite rising geopolitical tensions in the Middle East, Miran’s policy outlook appears largely unchanged. Over the weekend, the United States and Israel carried out strikes targeting Iran, a development that immediately triggered volatility in global energy markets. Oil prices reacted with a noticeable increase as investors priced in potential supply risks and broader regional instability.

These developments prompted some market participants to reconsider expectations regarding the pace of monetary easing in 2026. Higher energy prices can feed into inflation expectations, which in turn could complicate the Federal Reserve’s (Fed) efforts to bring inflation closer to its long-term target.

However, Miran emphasized that the available economic data does not yet suggest a significant shift in the broader outlook. From his perspective, the recent geopolitical events have not produced measurable changes in labor market conditions or inflation projections that would justify altering the Fed’s current policy direction.

A Gradual Approach to Monetary Easing

Miran favors a gradual and measured approach to policy easing rather than aggressive rate reductions. His proposal involves lowering interest rates by approximately 25 basis points at each policy meeting until the policy rate approaches what economists refer to as the “neutral” level — a point where monetary policy neither stimulates nor restrains economic growth.

Once that level is reached, Miran believes policymakers should reassess the economic landscape before deciding on additional steps. This strategy aims to balance economic support with financial stability by avoiding abrupt shifts in policy.

Diverging Views Within the Federal Reserve

The debate over the appropriate path for monetary policy continues within the Federal Reserve itself. Some policymakers prefer to wait for clearer evidence that inflation is sustainably moving toward the central bank’s 2 percent target before supporting further rate cuts.

Miran, on the other hand, argues that labor market indicators should be interpreted carefully and that current conditions suggest the economy could still benefit from additional policy support. In his view, the present environment allows room for a more accommodative stance without undermining economic stability.

This content does not constitute investment advice.

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His remarks indicate that while the Federal Reserve remains committed to maintaining a restrictive framework, policymakers are prepared to adjust if conditions warrant greater flexibility.

Fed’s Williams: Rate Cuts Aimed at Preventing Excessive Tightening

According to Williams, any future rate reductions would primarily serve to prevent monetary policy from becoming overly restrictive. This perspective underscores the Fed’s ongoing effort to balance its dual mandate of price stability and maximum employment. He also noted that rate cuts implemented last year contributed to reinforcing a balanced policy environment consistent with those objectives.

On the labor front, Williams expressed cautious optimism. He expects unemployment to decline both this year and next, pointing to what he described as a fundamentally solid economy. The labor market, in his view, is moving toward greater stability.

Inflation Outlook and Tariff Pressures

Inflation projections remain central to the Fed’s policy calculus. Williams expects inflation to ease to 2.5% this year and gradually converge toward the Fed’s 2% target by 2027. He characterized the latest inflation readings as reassuring, signaling that the disinflationary process is progressing in an orderly manner.

While tariffs continue to be cited as a primary driver of inflationary pressure, he emphasized that their impact has largely been felt at the national level and has not yet produced significant second-round effects. Moreover, tariff-related pressures are expected to diminish over the course of the year.

Market Pricing: FedWatch Signals Stability

Interest rate futures markets are currently pricing in a high probability of policy stability at the upcoming meeting. According to CME FedWatch data, there is a 96.3% likelihood that the policy rate will remain within the 350–375 basis point range. The probability of a 25-basis-point rate cut stands at just 3.7%.

This distribution reflects broad market expectations that the Fed will hold steady in the near term. Nevertheless, the forthcoming FOMC meeting will be closely scrutinized for forward guidance, particularly regarding the trajectory of policy in the second half of the year.

This content does not constitute investment advice. Financial markets involve substantial risk, and individuals should conduct their own research before making investment decisions.

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Geopolitical Shock, Swift Stabilization

Over the weekend, headlines from the Middle East briefly pushed Bitcoin toward the lower boundary of $60,000. However, the move proved short-lived. Buyers stepped in quickly, returning price action to its recent consolidation zone. Ethereum and several major altcoins mirrored this pattern, reflecting a broader stabilization across digital assets.

According to QCP Capital, approximately $300 million in long positions were liquidated during the initial decline. Despite this flush, the deleveraging event was relatively modest compared to the more disorderly episodes seen earlier in the year and at the start of 2025. This suggests that market participants had already reduced leverage ahead of the latest bout of volatility.

“Sell the News” Dynamics in Derivatives

In derivatives markets, a familiar “sell the news” pattern appeared to unfold. Laser Digital noted that U.S. equities rebounded from intraday lows, while both the dollar and oil retraced their initial spikes. Bitcoin followed a similar trajectory, recovering much of its early losses. The absence of a sustained disruption to energy supply chains appears to have limited broader macroeconomic fallout.

Short-term implied volatility in crypto options rose alongside the news flow, yet the broader volatility structure struggled to maintain elevated levels. QCP Capital also observed continued upside positioning into late March, with some investors anticipating a rebound after a weak monthly performance.

Fed Uncertainty and Inflation Risks

XS.com Senior Market Analyst Linh Tran stated that Bitcoin has been trading cautiously within the $66,000–$67,000 range. Investors are reassessing how quickly the Federal Reserve might move toward rate cuts, keeping the opportunity cost of non-yielding assets elevated.

Meanwhile, 21Shares Macro Strategy Director Stephen Coltman highlighted that wars have historically been inflationary, driving commodity prices higher and widening fiscal deficits. While risk assets may initially fluctuate, the longer-term interest rate outlook could become more complex.

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His remarks suggest that although the door to easing policy is open, timing remains dependent on incoming data—particularly inflation trends.

Inflation Progress Remains the Key Condition

Fed Goolsbee noted that he is among the more optimistic members of the Federal Reserve when it comes to rate cuts this year. However, he underscored the importance of patience. Cutting rates before inflation is firmly on a downward and sustainable path could jeopardize the Fed’s price stability objective.

This perspective reflects the Federal Reserve’s dual mandate: maintaining price stability while supporting maximum employment. According to Goolsbee’s framing, any policy shift must be grounded in clear economic evidence rather than anticipation alone. In short, rate cuts are conceivable, but only once inflation progress becomes convincingly durable.

A Resilient Economy Backed by Consumers

Beyond monetary policy, Chicago Fed President Goolsbee offered a generally positive evaluation of the U.S. economy. He described economic growth as solid and the labor market as stable. Importantly, he highlighted that the strongest pillar of the current economy is not artificial intelligence infrastructure or data centers, but the American consumer.

Household spending continues to play a central role in sustaining economic momentum. In Goolsbee’s view, consumer resilience has been a defining factor in maintaining overall growth and stability.

Context Within Broader Economic Debate

Goolsbee’s comments also enter the broader discussion surrounding the so-called “Trump economy.” He reiterated that the economic foundation remains sound, supported by steady employment conditions and continued expansion.

Overall, the message is measured: the economy is holding up well, consumers remain strong, and rate cuts are possible—but only once inflation clearly justifies such a move.

This content is for informational purposes only and does not constitute investment advice. Financial markets involve significant risk, and individuals should conduct their own research before making investment decisions.

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Market Pricing Signals a Pause

Current market-based expectations suggest that investors overwhelmingly anticipate no change in policy rates this month. According to pricing data from prediction platforms, the probability of the Federal Reserve keeping rates unchanged stands at 96%. This near-consensus view indicates that market participants see little immediate justification for a shift in monetary policy.

The strong bias toward a pause reflects broader uncertainty around inflation trends and economic resilience. Rather than positioning for an imminent easing cycle, investors appear to be bracing for continuity.

Rate Cut and Hike Scenarios

While a hold is the dominant expectation, alternative outcomes are still being priced in—albeit at very low probabilities. A 50 basis point or larger rate cut is currently assigned just a 1% likelihood. Meanwhile, a more modest 25 basis point reduction carries a 2% implied probability.

On the tightening side, the outlook is similarly muted. The chance of a 25 basis point or greater rate hike is also estimated at 1%. In other words, markets see very limited risk of a surprise move in either direction at this meeting.

Fed Officials Emphasize Inflation Progress

Recent remarks from Federal Reserve officials reinforce the cautious stance reflected in market pricing. Voting member Austan Goolsbee has stated that it would be premature to lower interest rates without clearer evidence that inflation is sustainably moving lower.

In prepared remarks dated February 24 for the National Association for Business Economics annual conference, Goolsbee indicated that additional rate cuts later this year could be possible—provided there is concrete and sustained progress toward the Fed’s 2% inflation target.

Taken together, current pricing and central bank commentary point to a high likelihood that rates will remain unchanged in March. Going forward, incoming inflation data and broader economic indicators will play a decisive role in shaping the Fed’s policy path in the months ahead.

This content is not investment advice. Financial markets involve significant risk, and individuals should conduct their own research before making investment decisions.

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Fed: Keep Interest Rates Unchanged, But the Door is Open

Nearly all participants supported the decision to leave rates steady at the January meeting. This consensus underscores the Fed’s preference to maintain its current stance while assessing incoming economic data.

However, the minutes also indicate that some officials believe additional rate cuts could become appropriate if inflation continues to decline in line with expectations. This suggests that the door to policy easing remains open, contingent on further progress in price stability.

At the same time, a few participants signaled that rate hikes could be warranted if inflation proves more persistent than anticipated. These members supported maintaining two-sided guidance for future rate decisions, reinforcing the Fed’s data-dependent and flexible approach.

Inflation Path: Slower and Less Predictable?

A key takeaway from the minutes is the concern that inflation’s journey back to the 2% target may be slower and more uneven than previously expected. Many participants warned that the risk of inflation remaining above target for an extended period remains significant.

Updated internal projections reflect a somewhat stronger outlook for economic activity compared to December. Even so, inflation forecasts were revised slightly higher. Meanwhile, unemployment is expected to gradually decline beginning in 2026, pointing to resilience in the labor market over the medium term.

Labor Market Stability and Growth Outlook

The labor market continues to show signs of stabilization. Most participants agreed that downside risks to employment conditions have diminished. With appropriate monetary policy, officials expect the labor market to stabilize this year and gradually improve thereafter.

Economic activity has been expanding at a solid pace, according to the discussion. Growth is projected to remain robust through 2026, suggesting that the broader economy retains forward momentum despite elevated interest rates.

In summary, the Federal Reserve (Fed) is maintaining a cautious posture. While rates remain on hold, policymakers are prepared to adjust in either direction depending on inflation dynamics and economic performance. Upcoming data releases will play a critical role in shaping the next phase of monetary policy.

This content is for informational purposes only and does not constitute investment advice. Financial markets involve significant risk, and individuals should conduct their own research before making investment decisions.

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Inflation Remains a Central Concern

Fed Governor Barr made it clear that inflation risks have not fully subsided. While price pressures have eased compared to prior peaks, inflation continues to run above the Federal Reserve’s 2% target. He stressed that policymakers need more consistent and convincing evidence that inflation is sustainably moving back toward that objective before considering any rate reductions.

Although declining commodity prices offer a constructive signal, Barr indicated that further confirmation is necessary to ensure the disinflationary trend is durable. He also noted that the neutral interest rate may have edged slightly higher, but not to a degree that would fundamentally alter the current policy framework. The Fed, he suggested, remains well positioned to maintain its stance. Additionally, he expressed cautious optimism that inflation could soften later in the year as the impact of tariffs gradually diminishes.

Labor Market: Stable but Sensitive

Recent data point to relative stability in the labor market, with employment conditions appearing broadly balanced. However, Barr cautioned that the labor market remains vulnerable to potential economic shocks.

Regarding artificial intelligence, he stated that there is currently no strong evidence that AI adoption has significantly increased unemployment. Nevertheless, he acknowledged that over the longer term, technological transformation could introduce structural shifts in employment patterns that warrant close monitoring.

Artificial Intelligence and Monetary Policy

Barr also addressed the surge in AI-related investment, describing it as largely indifferent to the Fed’s interest rate targets. In his view, the ongoing technology-driven investment wave is progressing independently of current monetary policy settings. As such, AI expansion alone does not justify a shift toward rate cuts.

While AI has the potential to enhance productivity and improve living standards over time, Barr noted that it remains unclear whether the recent productivity gains are structural or cyclical. For now, the Federal Reserve’s priority remains clear: securing convincing evidence that inflation is sustainably returning to its 2% target before adjusting policy.

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When Could the First Fed Cut Arrive?

Survey participants anticipate that the first rate reduction could come in June 2026. This timing is notable, as it would coincide with the expected leadership transition to Kevin Warsh as Fed chair. Market participants appear to be factoring in the possibility that a new chair could adopt a somewhat more flexible monetary stance, though expectations remain anchored to data-dependent decision-making.

Importantly, economists are not projecting a rapid easing cycle. Instead, the outlook suggests a gradual recalibration of policy, contingent on inflation trends and broader macroeconomic conditions.

Bond Markets Are Already Pricing It In

Rate-cut expectations are reflected in short-term Treasury yields. Forecasts for the interest rate–sensitive two-year U.S. Treasury yield suggest a decline from 3.50% to 3.45% by the end of April, followed by a further drop to 3.38% by the end of July. These projections indicate that financial markets are already adjusting to the possibility of moderate easing.

However, the longer end of the curve tells a different story. The median forecast for the 10-year benchmark yield stands at 4.29% over the next year, up from last month’s 4.20% expectation. Analysts attribute this upward bias to persistent inflation pressures and concerns surrounding central bank independence.

Fiscal Policy Complicates the Picture

A significant portion of surveyed bond strategists believe rising Treasury issuance in the coming years could limit the Fed’s ability to meaningfully shrink its $6.6 trillion balance sheet. Expanded borrowing—potentially linked to tax reductions and fiscal spending initiatives—may increase supply in the bond market, influencing long-term yield dynamics.

This evolving interplay between fiscal expansion and monetary normalization suggests that future rate decisions will not be driven solely by inflation and growth data. Instead, public debt dynamics and market stability considerations are likely to play a growing role in shaping the Fed’s policy trajectory.

This content is not investment advice. Financial markets involve significant risk, and investors should conduct their own research before making any decisions.

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