The likelihood of a Federal Reserve interest rate cut in March has collapsed to just 2.7%, the lowest level since the escalation of US-Iran tensions, according to data from the CME FedWatch Tool. The tool shows a 97.3% probability that the Fed will hold rates steady at the current range of 3.5%-3.75% during its upcoming March 17-18 meeting. This marks a dramatic shift in market expectations, driven by rising inflation fears fueled by surging crude oil prices following recent geopolitical conflicts.
Former Treasury Secretary Janet Yellen amplified these concerns, warning that the US-Iran conflict could push inflation even higher, potentially blocking the Fed from reducing rates. "I think the recent Iran situation puts the Fed even more on hold, more reluctant to cut rates than they were before this happened," Yellen stated. She highlighted that if the Strait of Hormuz remains closed, elevated oil prices could persist, worsening inflationary pressures. The core Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge, remains at 2.8%, above the central bank's 2% target.
Despite the cautious outlook from professional traders and the Fed's own minutes suggesting policy easing "may not be warranted" yet, crypto market sentiment has turned overwhelmingly bullish. Social analytics platform LunarCrush reports that online sentiment toward the Fed has surged to 91% positive, the highest in a year, with over 181 million social interactions recorded in 24 hours. The optimism stems from the belief that rate cuts are approaching, which historically injects liquidity and supports risk assets like Bitcoin and Ethereum.
Bitcoin has already shown resilience, reclaiming momentum and climbing close to the $72,000 level, a roughly 20% rebound from February lows near $60,000. Analysts suggest that even without a March cut, crypto could rally as investors price in future liquidity. The next major catalysts are the February jobs report on March 7 and the Consumer Price Index (CPI) inflation report on March 12. Softer-than-expected data could rapidly strengthen rate-cut expectations and potentially trigger the next major market rally.
