The US Federal Reserve FOMC Meeting has kept everyone on their toes in the crypto markets. A rate cut would mean some breathing space for cryptocurrencies and a light recovery rally while a stable policy rate would mean high interest rates sucking away the remaining liquidity in the markets.
Summary Video
US Federal Reserve Open Market Committee- FOMC Meeting on 18 and 19 March 2025
The United States Federal Reserve system is going to have its next policy rate meeting today on 19 March 2025. The meeting will be the first one under the Donald Trump administration.
The current meeting is one of the most crucial meeting in the last one year because The US Fed seems to be in a dilemma on whether to cut the interest rates further, rising an inflation of 3% or higher or to keep them constant and risk sinking the job market along with domestic consumption and industrial growth.
This dilemma is made even worse by Donald Trump’s reciprocal tariff policy which has imposed crippling tariffs on USA, China, Canada, Mexico, and mulls to implement the next round of tariffs on the European Union.
Previous Comments by US Fed
In December 2024 meeting, the US Fed signaled that it may have to keep interest rates constant for the most part of 2025 because of inflation expectations around 3% throughout the year.
Before this meeting, the expectation was that the Fed would cut interest rates further after two rate cuts in July (0.5%) and September (0.5%) 2024.
Possible Scenarios
No Rate Cut, Possible Cut in May 2025
This is the presumed scenario because the inflation is already at a high of 3% in Feb 2025 while the US Jobs market saw a growth. However, the US industrial growth saw a decline.
0.25% Rate Cut, No Rate Cut in May 2025
If Donald Trump’s trade war forces the Fed to cut interest rates, we expect a 0.25% rate cut. Since the inflation is already at a high of 3%, this rate cut would mean there is room for only one more cut in 2025 presumably around December.
No Rate Cut in March or May 2025
If the US Fed decides to go hot on inflation, there could be no rate cuts in March or May this year.
