Based on CME FedWatch knowledge, the chance of a Federal Reserve rate of interest lower in Could has plunged from 57% to simply 15%. This is because of President Trump’s 90-day tariff pause and newly launched March FOMC minutes.
The March 18–19 FOMC minutes, launched Tuesday, affirm that policymakers stay cautious on easing.
FOMC Minutes Reveal Hawkish Warning
Whereas the Fed acknowledged strong financial progress and secure labor markets, officers famous that inflation continues to be working above the two% goal.
Many individuals emphasised upside dangers to inflation, notably from broad-based tariff will increase and potential provide chain disruptions.
A number of Fed members noticed that inflation prints for January and February got here in greater than anticipated, and warned that the consequences of latest tariffs — notably on core items — might show extra persistent than anticipated.
Federal Reserve’s Curiosity Fee Minimize Likelihood in Could 2025. Supply: CME FedWatch
Though individuals supported sustaining present rates of interest, they confused that coverage flexibility is important as uncertainty surrounding commerce, fiscal, and immigration coverage clouds the outlook.
As of now, Trump’s determination to pause new tariffs for many international locations for 90 days whereas elevating Chinese language tariffs to 125% has decreased fears of a full-blown commerce struggle.
Nevertheless, retaliatory motion from China and elevated inflation expectations reinforce the Fed’s hawkish stance. So, policymakers are signaling they’re in no rush to chop charges.
What It Means for Crypto
As we’ve seen these days, crypto markets are macro-sensitive property. A extra hawkish Fed stance and decreased odds of near-term fee cuts may result in:
- Decrease liquidity expectations, weighing on crypto asset costs.
- Stronger greenback strain, doubtlessly decreasing Bitcoin’s enchantment as an inflation hedge.
- Increased volatility, as macro uncertainty intensifies and fee lower hopes fade.
For now, the Fed’s message is evident: financial coverage stays data-dependent, however a pivot is off the desk until financial circumstances deteriorate sharply.
The market is at the moment rallying after Trump’s 90-day Tariff pause. Nevertheless, Crypto buyers hoping for tailwinds from fee cuts might have to attend.
