pretext=”width=device-width, initial-scale=1.0″ name=”viewport”/>

Trump’s Rate-Cut Crusade: Fed Under Fire as Crypto Markets Brace for Impact

Donald Trump is once again unleashing a full-court press on the Federal Reserve, demanding an immediate interest rate cut in what he calls a “special meeting” to slash borrowing costs. The former president, now back in the Oval Office, has been relentless in his criticism of Fed Chair Jerome Powell, arguing that the central bank’s high interest rate policy is not only economically damaging but also a national security threat.

At a recent White House meeting, Trump didn’t mince words. “What’s a better time to cut interest rates than now? A third-grade student would know that,” he declared, according to videos circulating on X (formerly Twitter). This latest salvo comes just days after Trump took to Truth Social, insisting that Powell “should be dropping interest rates, IMMEDIATELY.”

The president’s frustration with the Fed’s monetary policy is nothing new. Back in January, he argued that the US should have “substantially lower” rates and “the lowest in the world,” branding Powell as “too late” and accusing him of “hurting our country, and its National Security” by maintaining elevated interest rate levels. Trump’s push for lower rates is driven by a desire to reduce the cost of servicing the massive $39 trillion US national debt and to stimulate economic growth, housing, and the stock market.

But it’s not just traditional markets that stand to benefit from a rate cut. Lower interest rates can also push investors toward higher-risk assets like stocks and crypto. Cheaper borrowing costs fuel broader market liquidity, meaning more money flows into speculative assets. For the crypto community, this is a potential game-changer. Lower rates could mean more capital flowing into Bitcoin, Ethereum, and other digital assets, driving prices higher and attracting new investors.

No Rate Changes Likely at Fed’s Wednesday Meeting

Despite Trump’s fiery rhetoric, the Federal Reserve is unlikely to budge this week. The US central bank kicks off its two-day March meeting on Tuesday and is slated to announce its rate decision on Wednesday. However, CME futures markets paint a very different picture, currently indicating a 99% probability that rates will remain unchanged in the 3.50% to 3.75% range this week.

The outcome for the April 29 meeting is similar, with a 97% probability of no change. This suggests that the Fed is in no hurry to cut rates, despite Trump’s demands. The central bank is likely taking a cautious approach, weighing the risks of inflation against the potential benefits of lower borrowing costs.

Adding to the complexity is the fact that Trump’s pick for Fed chair replacement, Kevin Warsh, is set to take the helm in mid-May when Powell’s term ends. Warsh may be more open to cutting rates, but until then, the Fed is expected to maintain its current stance.

Complicating matters further is the recent surge in oil prices due to the ongoing conflict with Iran. Higher fuel costs are likely to push up food and other goods prices via higher transport costs, leading to higher inflation. This could prompt the Fed to raise rates instead of cutting them, as it seeks to keep inflation in check.

The current rate of inflation in the US remained steady at 2.4% in February, but it is expected to rise in March, according to Trading Economics. This puts the Fed in a difficult position, as it must balance the need to support economic growth with the imperative to control inflation.

Fed Will Play the Waiting Game

With the US-Iran conflict’s impact on rising oil prices, “traders have already priced in the likelihood of zero cuts this year,” Jeff Mei, chief operations officer at the BTSE exchange, told Cointelegraph. This should mean that there will be “less downward pressure on crypto asset prices,” because oil’s impact on inflation is “unclear at this point,” and the Fed will likely “continue to wait out the situation.”

For crypto investors, this is a critical juncture. The Fed’s decision—or lack thereof—could have significant implications for the market. If rates remain unchanged, it could signal that the central bank is prioritizing inflation control over economic stimulus, which could dampen investor sentiment. On the other hand, if the Fed signals a willingness to cut rates in the future, it could provide a much-needed boost to crypto prices.

The crypto market is already bracing for impact. Bitcoin, the flagship cryptocurrency, has been trading in a tight range as investors await clarity from the Fed. Ethereum and other altcoins are also feeling the pressure, with many traders adopting a wait-and-see approach.

But it’s not just the Fed that’s influencing the crypto market. Geopolitical tensions, such as the US-Iran conflict, are also playing a role. The surge in oil prices has led to concerns about inflation, which could prompt the Fed to raise rates instead of cutting them. This would be bad news for crypto, as higher rates typically lead to lower risk appetite among investors.

Despite these challenges, the crypto community remains optimistic. Many believe that the long-term fundamentals of digital assets are strong, and that a rate cut—whenever it comes—will provide a significant tailwind for the market. In the meantime, investors are closely watching the Fed’s every move, hoping for signs of a more dovish stance.

As the Fed prepares to announce its decision, all eyes are on Washington. Will Trump’s pressure campaign pay off, or will the central bank stick to its guns? The answer could have far-reaching implications for the US economy—and for the future of crypto.

Stay tuned for updates as this story develops. The intersection of politics, monetary policy, and crypto is more volatile than ever, and the next few weeks could be pivotal for the market.

,