US Federal Reserve members were split on whether the war in the Middle East could spur further interest rate cuts before the end of 2026, according to the latest Federal Open Market Committee (FOMC) meeting in March.
On Wednesday, the Fed released minutes from its last FOMC meeting on March 17 and 18. The meeting ended with an 11-1 vote to keep rates steady at 3.5% to 3.75%, with many officials cautious about the potential impacts of war and what it could mean for the economy.
Amid a risk of further conflicts, the official consensus pointed to a potential rate cut this year, but as Fed officials noted in the minutes, only if inflation does not get out of control.
“Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations,” according to the Fed minutes.
Rate cuts are generally seen as a positive catalyst for crypto as they free up investment liquidity and can spur demand for speculative investments. The last interest rate cut was Dec. 10, 2025, with the Fed slashing rates by 25 basis points.
Fed Chair Jerome Powell speaking at the March 18 FOMC news conference. Source: Federal Reserve
While a cut may still be on the table for this year, the general feeling from the FOMC meeting was that it was “too early to know how developments in the Middle East would affect the U.S. economy.”
The FOMC’s next meeting is scheduled for April 28-29.
Cuts still possible, but so are hikes
While some officials were cautiously optimistic about a rate cut, others warned that the opposite might be necessary.
“Some participants judged that there was a strong case for a two-sided description of the Committee’s future interest rate decisions … reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain at above-target levels.”
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Inflation was not the only concern, as many officials pointed to potential downside risks in the labor market, arguing that “in the current situation of low rates of net job creation, labor market conditions appeared vulnerable to adverse shocks.”
According to the CME Group’s FedWatch tool, there is currently a 75.6% chance that the Fed will keep rates at 3.5% to 3.75% during the Fed’s Dec. 8 meeting later this year.
Meanwhile, the chance of a rate cut is 20.4%, while the chance of a rate hike is 2.4% at the time of writing.
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