Fed Rate Cut Hopes Fade Amid US-Iran Conflicts

The crypto market is heading into a crucial week as the Federal Reserve’s FOMC meeting is looming. As the FOMC prepares to decide on the Fed rate cuts, the market is bracing for increased volatility.

Amid heightened geopolitical tensions, hopes of a Fed rate cut have significantly faded. As the ongoing US-Iran war continues to raise concerns about energy prices and inflation, the Fed is expected to hold the rates steady, according to experts.

Will the Fed Cut Rates in Tomorrow’s FOMC Meeting?

The US Federal Reserve has scheduled its Federal Open Market Committee (FOMC) meeting this week, on March 17 and 18. The central bank will make its most important decision, determining whether to increase or decrease interest rates in response to growing inflation concerns and ongoing geopolitical conflicts.

The Fed’s FOMC meeting follows the significant inflation report last week. As CoinGape reported, the PCE index rose 2.8% year-over-year in February. Core PCI came in at 3.1% YoY, exceeding the Fed’s target of 2%. This inflation report is likely to impact the Fed rate cut decision, with economists projecting the Fed to hold it steady at the current 3.5%-3.75% range.

The CME FedWatch tool projections also align with this speculation. According to the tool, the odds of the central bank holding the rates remain high at 99.2%. This indicates that the bank is least likely to make any changes to the current rates.

Fed Rate Cuts Likely Delayed Until June

According to recent reports, economists are expecting the US Federal Reserve to cut interest rates for the first time in 2026, only in June. They believe that the bank will not reduce the rates amid the ongoing Middle East tensions.

Jeremy Schwartz, a senior U.S. economist at Nomura, expects only “one or two cuts this year.” He added,

“The conflict with Iran is boosting global energy prices. That’s going to lead to some headline inflation, but potentially also some pass-through into ​some core inflation components. Meanwhile, the underlying trend in the labor market is not strong, but it doesn’t seem to be deteriorating either and that’s ​a situation where the Fed isn’t really forced into a kind of more reactive posture.”

Reports suggest that nearly 40% of economists expect only one or no Fed rate cuts this year. This marks more than twice the number of those who forecast three or more reductions. Despite President Donald Trump’s repeated calls for rate cuts, the Fed is expected to keep rates unchanged.

Crypto Market on Edge

The crypto market is now keenly awaiting the FOMC meeting to know the Fed’s decision. With the FOMC meeting looming, the market is on edge, anticipating increased volatility. The market also observes the critical announcements that Fed Chair Jerome Powell will make, together with the meeting and the decision.

Ahead of the FOMC meeting, the crypto market has once again returned to its positive performance. The industry has achieved a 3% increase, which has brought its total value to $2.51 trillion. The cryptocurrencies BTC, ETH, and XRP have experienced significant value increases. However, the future remains unknown.

In addition to cryptocurrencies, crypto stocks are also facing significant volatility. Despite crypto stocks’ recent spike, they are headed for increased volatility amid the FOMC meeting. Safe-haven assets like gold and silver are also under severe pressure.