Members of the US Federal Reserve are divided over whether the ongoing conflict in the Middle East could influence interest rate decisions before the end of 2026, according to minutes released from the Federal Open Market Committee meeting held on March 17 and 18. The Fed published the minutes on Wednesday, offering a detailed look at the internal debate among policymakers. The meeting concluded with an 11-1 vote to hold rates steady at a range of 3.5% to 3.75%.
Officials expressed caution about the potential economic consequences of escalating regional conflict. While a broad consensus emerged that a rate cut could be appropriate at some point this year, policymakers stressed that any such move would depend heavily on inflation trends. The minutes noted that “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.”
The prevailing sentiment at the meeting was that it remained “too early to know how developments in the Middle East would affect the U.S. economy.” This uncertainty left officials reluctant to commit to a clear direction for monetary policy. The last rate adjustment came on December 10, 2025, when the Fed reduced rates by 25 basis points.
Not all officials leaned toward easing, however. Some argued that conditions could just as easily warrant a rate increase. The minutes reflected this division, with certain participants making “a strong case for a two-sided description” of future rate decisions, acknowledging that upward adjustments could become necessary if inflation remained above target levels for a prolonged period.
Beyond inflation, labor market conditions also drew concern from several officials. Policymakers pointed to low rates of net job creation as a sign of vulnerability, warning that the labor market could be susceptible to adverse shocks under current conditions. This added another layer of complexity to the Fed’s already uncertain policy outlook.
Rate cuts are broadly viewed as a positive signal for speculative assets, including cryptocurrencies, as lower borrowing costs tend to free up investment capital and encourage risk-taking. The prospect of a cut remaining on the table has kept markets attentive to any shifts in the Fed’s tone. The FOMC‘s next scheduled meeting is set for April 28 and 29.
Market expectations, as tracked by the CME Group‘s FedWatch tool, currently place a 75.6% probability on rates remaining unchanged at the Fed’s December 8 meeting. The likelihood of a rate cut stands at 20.4%, while the chance of a rate hike is estimated at just 2.4% at the time of the report.
Originally reported by CoinTelegraph.
