Is the Federal Reserve no longer only talking about interest rate cuts? The March minutes release a "dual description" signal, what variables do risk assets face?

On April 9, 2026, the Federal Reserve’s March monetary policy meeting minutes released a key signal: an increase in the number of officials explicitly describing future interest rate decisions as “dual”—meaning they simultaneously leave open the possibility of both rate cuts and rate hikes—in the FOMC statement. The minutes clearly state: “Some participants believe there are sufficient reasons to describe the Committee’s future rate decisions in a dual manner in the post-meeting statement.” In contrast, the January minutes only mentioned “a few” participants holding this view. In the Fed’s language system, “some” refers to a larger number of people than “a few.” This wording upgrade indicates a shift in internal attitudes within the Federal Reserve toward rate hikes and suggests that the macro policy environment facing the crypto market in 2026 is entering a more uncertain phase.

What Does the Upgraded “Dual” Language in the Fed Mean?

The shift from “a few” to “some” is not just a linguistic nuance but a direct reflection of expanding internal disagreements within the Fed. Officials supporting the dual description believe that the policy statement should explicitly reflect that “if inflation remains persistently above target, raising the federal funds rate target range may be appropriate.” This stance marks an important departure from the Fed’s post-2024 statements, which have been more rate-cut oriented: although the March statement still retained language about future rate cuts, an increasing number of officials want to include the rate hike option in the statement. In the Fed’s language system, a change in the number of people often signals a shift in internal consensus, and this shift is occurring against the backdrop of significantly rising energy prices driven by Middle Eastern geopolitical conflicts.

How Do Oil Price Shocks Alter Inflation Paths and Rate Hike Probabilities?

The Middle Eastern geopolitical conflict is the direct trigger for this round of policy expectation reversal. The minutes show that officials expect that the oil price increases triggered by Iran-related conflicts will temporarily push inflation higher and delay the process of inflation returning to the 2% target. If the conflict persists long-term, energy prices could stay elevated longer, raising input costs and more likely transmitting to core inflation. Most participants pointed out that progress toward the inflation target may be slower than previously expected, and the risk of inflation remaining above target has increased. Every $10 per barrel increase in oil prices could raise overall U.S. inflation by 0.3 to 0.5 percentage points. The pricing in the money markets has already reflected this change: the probability of rate cuts in 2026 has approached zero, and there is even a slight market tilt toward tightening. The strength of oil prices is shifting from a short-term shock to a more structural inflation driver, directly altering the Fed’s policy response function.

What Does the Growing Internal Disagreement in the Fed Imply for Policy Pathways?

The March minutes clearly show that internal disagreements within the Fed over policy direction have significantly widened. Most officials worry that the prolonged Middle Eastern conflict could further weaken the labor market, necessitating additional rate cuts, as sharp increases in oil prices could harm household purchasing power and global economic growth. Meanwhile, many policymakers emphasize upside inflation risks, believing that high oil prices could sustain inflation above expectations for longer, possibly requiring rate hikes to bring inflation back to 2%. The minutes state that “the vast majority of participants see upside risks to inflation and downside risks to employment as being at elevated levels,” and these risks have increased with the evolving Middle East situation. This coexistence of “dual risks” suggests that the Fed is more inclined in the short term to keep rates unchanged to assess how the situation develops. At the end of 2025, markets priced in 2 to 3 rate cuts for the year, but current futures market pricing has shifted 180 degrees—this not only changes the expected path of risk-free rates but also redefines the pricing benchmarks for all risk assets.

How Has the Market’s Expectation of the 2026 Interest Rate Path Reversed?

The magnitude of this expectation reversal is remarkable. According to data from the financial data platform LSEG, the current market expects the U.S. policy rate in 2026 to remain essentially unchanged, with the previously widely anticipated multiple rate cuts completely removed from pricing. The CME FedWatch tool shows that the probability of rate cuts before the end of the year is now extremely low, while the chance of rate hikes has risen to nearly 30%. The 10-year U.S. Treasury yield has risen to about 4.40%, and Brent crude oil prices once surged past $108 per barrel. This indicates a fundamental shift in the macro trading framework: from a “loose monetary policy-driven risk appetite recovery” to a suppressive environment characterized by geopolitical energy shocks, prolonged high interest rates, and increased policy uncertainty. For the crypto market, the key point of this shift is that the market is no longer just worried about “delayed rate cuts” but is beginning to price in the tail risk of “possible rate hikes.”

How Do Changes in Rate Expectations Transmit to Cryptocurrency Asset Pricing?

The transmission logic of macro policy is increasingly evident in crypto asset pricing. High interest rates act as a “pump” for the crypto market: when U.S. Treasury yields stay high or rebound, the relative attractiveness of risk-free assets increases significantly, and the high volatility of crypto assets faces a high opportunity cost in the face of risk-free yields above 4%. If inflation exceeds expectations, leading markets to bet on the Fed maintaining high rates or even hiking, capital will withdraw from high-risk assets, and Bitcoin (BTC) typically declines in tandem with U.S. stocks (Nasdaq). The global liquidity squeeze caused by a stronger dollar and rising Treasury yields is creating significant headwinds for non-yielding assets like BTC. Additionally, when the Fed adopts a hawkish stance, arbitrage opportunities narrow, lending costs for market makers rise, on-chain activity of stablecoins declines, incremental capital inflows slow, and market resilience is further suppressed.

The Core Macro Risks Facing the Crypto Market in 2026

At this point, the crypto market needs to track three macro risk variables simultaneously. Inflation data is the core input for Fed policy decisions: February’s PCE inflation was roughly in line with expectations, but March’s CPI may rise further. If the upward trend in oil prices continues, price pressures could remain elevated for a longer period. The resilience of the labor market determines whether the Fed has reason to adopt an easing stance—so long as employment does not show substantial softening, the Fed’s stance of holding steady is unlikely to change. Geopolitical developments are amplifiers for all variables: the security of energy transportation through the Strait of Hormuz and the duration and intensity of Middle Eastern conflicts will directly influence oil prices, inflation expectations, and policy paths. The macro trading framework has shifted from a one-way game of “when to cut rates” to a two-way game of “hike or cut,” demanding higher calibration from crypto market pricing.

Summary

The increase from “a few” to “some” supporters of the Fed’s “dual” description in the March minutes, combined with oil price shocks driven by Iran-related conflicts, is reshaping macro policy expectations for 2026. The market has essentially priced out rate cuts, with the probability of hikes rising sharply, and liquidity pressures are mounting. The Q1 2026 market data already clearly reflect the influence of macro variables—Bitcoin’s quarterly decline exceeded 22%, and ETF fund flows showed net redemptions. Looking ahead, inflation paths, employment data, and geopolitical developments will be the core variables in crypto market pricing. Investors should pay attention to whether the valuation framework needs recalibration as the macro narrative shifts from “easy monetary policy expectations” to “higher rates for longer + tail risk of hikes.”

FAQ

Q1: What does the upgraded “dual” language in the Fed’s March minutes imply?

In the Fed’s language system, “some” refers to a larger number of officials than “a few.” The shift from only “a few” officials supporting the dual description in the January minutes to “some” officials holding the same view in March reflects an increasing internal consensus on considering rate hikes. Supporters believe that the policy statement should explicitly state that if inflation remains persistently above target, rate hikes may be appropriate.

Q2: Why would rising oil prices prompt the Fed to consider rate hikes?

Rising oil prices directly boost energy component inflation and transmit through production costs, logistics expenses, and consumer expectations to core inflation. The minutes show officials expect that oil price increases triggered by Iran-related conflicts will delay inflation returning to 2%. If energy prices stay high, input costs are more likely to be passed through to core inflation, potentially forcing the Fed to maintain tightening or even hike rates.

Q3: What is the transmission mechanism of the Fed’s changing rate expectations to crypto asset pricing?

In a high-interest-rate environment, elevated U.S. Treasury yields reduce the relative attractiveness of risk assets, and the high volatility of crypto assets faces a significant opportunity cost against risk-free yields above 4%. A stronger dollar and liquidity tightening further suppress speculative assets. During the transition from “multiple rate cuts” expectations to “possible rate hikes,” crypto assets typically endure greater valuation pressures.