The rate of cutting down the whales of the Fed has decreased to 15% after Trump paused tariffs.

According to data from CME FedWatch, the likelihood of the Federal Reserve cutting interest rates in May has significantly decreased from 57% to just 15%. The main reason comes from President Donald Trump's decision to delay the 90-day tariff and the minutes of the March FOMC meeting that have just been released.

FOMC Minutes for March: Cautious but Hawkish Stance

The minutes of the FOMC meeting held on March 18-19, released on Tuesday, show that policymakers remain cautious about easing monetary policy.

Despite acknowledging stable economic growth and a strong labor market, Fed officials still expressed concerns about inflation continuing to remain above the 2% target.

Many FOMC members emphasized the risk of rising inflation, particularly from widespread tariffs and potential disruptions in the supply chain. Some members also noted that inflation indicators in January and February were higher than expected, while warning that the impact of the new tariffs — especially on core items — could last longer than anticipated.

Probability of Fed rate cuts in May 2025 | Source: CME FedWatchAlthough Fed members agree that the current interest rate should be maintained, they also emphasize that flexibility in policy is necessary as economic prospects are affected by uncertain factors such as trade, fiscal policy, and immigration policy.

President Trump's decision to temporarily suspend new tariffs on most countries for 90 days, while increasing tariffs on Chinese goods to 125%, has somewhat alleviated concerns about a full-blown trade war. However, retaliatory actions from China and expectations of rising inflation continue to bolster the Fed's "hawkish" stance. This indicates that policymakers have no intention of hastily cutting interest rates in the near future.

Impact on the cryptocurrency market

The cryptocurrency market, which is sensitive to macroeconomic factors, is facing new pressures from the Fed's hardline stance and the reduced likelihood of short-term interest rate cuts. Potential impacts include:

• Liquidity has decreased, putting pressure on the value of cryptocurrency assets.
• A stronger USD reduces the appeal of Bitcoin as an inflation hedge.
• Increased volatility, as macroeconomic uncertainty continues to linger and hopes for interest rate cuts gradually fade.

Currently, the message from the Fed is very clear: monetary policy will depend on economic data, and any changes will only occur if economic conditions worsen significantly.

Although the market is showing signs of recovery after President Trump's decision to temporarily suspend the tax for 90 days, cryptocurrency investors hoping for support from interest rate cuts may have to wait longer.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making any decisions. We are not responsible for your investment decisions.

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Mr. Teacher

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