The Federal Reserve kept rates at 3.5%-3.75% while raising its 2026 inflation forecast to 2.7%, triggering a crypto market selloff.
The Federal Reserve held interest rates steady at 3.5%-3.75% on March 18, raising its inflation forecast to 2.7% for 2026 and signaling only one rate cut this year. Bitcoin dropped roughly 4% to $71,600 while Ethereum fell about 6% to $2,181.
The Federal Open Market Committee voted unanimously to keep the federal funds rate unchanged at 3.5%-3.75% at its March meeting. This marked the second consecutive pause in 2026.
The closely watched dot plot now projects only one 25-basis-point cut this year, a more hawkish shift from earlier expectations. Officials raised their end-of-year inflation forecast to 2.7%, up from the previous estimate of 2.4%. Core inflation expectations also climbed to 2.7%, up from 2.5%.
Chair Jerome Powell cited elevated economic uncertainty, the impact of the Iran conflict, and persistent inflation pressures as key factors behind the decision. Surging oil prices near $100 per barrel and ongoing geopolitical risks have complicated the path toward rate cuts.
Crypto markets reacted swiftly. Bitcoin fell from around $74,000 to approximately $71,600, continuing a pattern where BTC has posted negative returns after seven of eight FOMC meetings in 2025. Ethereum dropped roughly 6% to $2,181, and altcoins saw broader declines.
The hawkish tone is significant for crypto because fewer rate cuts mean higher borrowing costs persist longer, reducing the appeal of risk assets. With inflation expectations rising and the Fed indicating it may not cut rates until October or December at the earliest, the window for a dovish pivot has narrowed considerably.
Despite the sell-off, institutional activity remains present. Binance recorded a $2.2 billion USDT inflow on March 18, the largest single-day stablecoin deposit since November 2025, suggesting some traders see the dip as an opportunity.
Markets are now focused on upcoming CPI data and the next FOMC meeting on June 16-17. If inflation stays above the Fed's 2% target and oil prices remain elevated, the possibility of rate hikes later in 2026 could pressure crypto further. Bitcoin has fallen in each of the last four months, a streak not seen since the pandemic. The $70,000 level represents a key support zone, and a break below could accelerate selling.
The Fed's hawkish hold underscores the tension between persistent inflation and a weakening labor market. For crypto markets, the message is clear: rate relief is unlikely before the second half of 2026, and the path forward depends heavily on geopolitical developments and inflation data.
Wall Street giant Citigroup projects Bitcoin could reach $143,000 within 12 months, citing ETF demand and regulatory tailwinds as key catalysts.
The largest US bank is assessing spot and derivatives trading services as regulatory clarity enables traditional finance to deepen crypto involvement.
All 12 U.S. spot Bitcoin ETFs saw positive inflows on March 2, totaling $458M as BTC rebounds from February lows.
Disclaimer: News content is for informational purposes only and should not be considered financial advice. Market conditions can change rapidly. Always conduct your own research.
