Fed Officials Signal Uncertainty on March Rate Cut
Federal Reserve Governor Waller described the possibility of an interest rate cut in March as a "coin flip" following a strong U.S. jobs report. This uncertainty was compounded by a New York Fed measure showing that inflation reheated in December, keeping risk assets like crypto and equities on edge.
- The January jobs report showed the U.S. economy added 130,000 jobs, with the unemployment rate declining to 4.3%. However, significant downward revisions to 2025's data showed that only 181,000 jobs were added for that entire year, a much weaker performance than initially reported. - The Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) price index, rose 0.3% in December and was up 3.0% from a year earlier. This remains above the central bank's 2% long-term inflation target. - As of February 24, 2026, financial markets are pricing in a 96% probability that the Federal Reserve will keep interest rates unchanged at its March meeting, according to the CME FedWatch Tool. The probability of a rate cut by the June meeting, however, rises to 46.8%. - Minutes from the Fed's January meeting revealed a divided committee; while some officials believed further rate cuts would be appropriate if inflation cools, others wanted to hold rates steady for some time. A few officials even suggested they could support language indicating a rate *hike* might be necessary if inflation remains persistently high. - Chicago Fed President Austan Goolsbee has stated that while he is optimistic about the potential for rate cuts in 2026, it is contingent on seeing "actual progress on inflation." - For digital assets, interest rate hikes are typically bearish as they tighten liquidity and reduce appetite for risk assets. Conversely, rate cuts are generally viewed as a bullish signal, as lower yields on traditional instruments can drive investors toward alternatives like cryptocurrencies in search of returns. - The U.S. dollar has been generally inversely correlated with the prices of crypto assets. Since higher interest rates often strengthen the dollar, this can make dollar-denominated cryptocurrencies more expensive for global investors.
