The Expectations of Rate Cuts Fade Under the Pressure of Federal Reserve Policy

The Federal Reserve maintained an unwavering stance at its monetary policy meeting on January 29, deciding to keep interest rates unchanged and thus halting any hopes of immediate relief. This shift marks the end of three consecutive cuts made since September of the previous year, dispelling market expectations of a relief in March. By 2026, Goldman Sachs and CICC analysts have identified June as the only viable key window for a rate cut, a prospect that diminishes under the current political uncertainty.

The Historic Pause: End of the Trifecta of Cuts

The January 29 decision was not unanimous: two board members voted against it, reflecting internal debate over the direction of monetary policy. Powell argued that economic data did not justify further political support. The U.S. economy has shown resilience that surprised the market, with a stable unemployment rate and a decelerating disinflation process. These economic realities starkly contrasted with previous optimistic projections.

Behind this landscape, a subtle struggle is detected between the Federal Reserve and the political demands of the new Trump administration. While Powell will step down at the end of May, there is a possibility that his successor will implement a more flexible policy. However, fiscal and tariff measures in the first half of the year could intensify inflation, complicating any rate reduction scenario before stimulus measures moderate in the second half.

June Under Pressure: An Increasingly Narrow Window

The probability of holding rates steady in March reaches 86.5%, according to market data. Financial institutions predict that throughout 2026, there could be two cumulative cuts of approximately 50 basis points, but their timing remains uncertain amid macroeconomic volatility.

This situation presents a challenge to the rate reduction timetable many investors expected. The market is caught between two opposing forces: the need for long-term monetary easing and the current strength of the dollar, which pressures risk assets.

The Strong Dollar and Cryptocurrency Market Volatility

Following the Federal Reserve announcement, Bitcoin initially reacted downward but later stabilized around $68,700 (data from February 9), experiencing a 2.15% decline in the last 24 hours. Despite this pressure, institutional allocation continues to be a significant support that limits further declines.

Other crypto assets also reflected pressure: Synapse (SYN) dropped 3.61% ($0.06), while “我踏马来了” experienced a 3.39% decrease ($0.02). These movements illustrate how rate policies fade in the face of the dollar’s capacity to influence risk sentiment in the crypto market.

Long-Term Outlook: Safe-Haven Assets Remain Relevant

Although the strong dollar currently pressures risk sentiment, long-term rate cut expectations have not completely disappeared. The safe-haven property of crypto assets continues to ferment beneath the surface, suggesting that current volatility could be temporary.

For crypto market investors, the challenge lies in navigating this window of uncertainty. The June decisions will be critical, but political context and economic dynamics will continue to be decisive factors. The central question remaining under scrutiny is how long the strong dollar will continue to pressure the crypto market before expectations of monetary easing once again dominate market sentiment.