Federal Reserve policymakers discussed the possibility of raising interest rates at their January meeting, according to newly released minutes, citing concerns that inflation may remain above target.
Several participants said:
“Upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels,”
Even as rates were held steady at 3.5% to 3.75% following three cuts at the end of 2025.
If implemented, it would mark the first rate hike since July 2023, though CME futures markets currently price a 94% probability that rates will remain unchanged at the Fed’s March 18 meeting.
The minutes showed a notable hawkish contingent favouring patience, with some officials saying it would be appropriate to “hold the policy rate steady for some time” and warning that progress toward the 2% inflation goal may be slower and more uneven than expected.
US inflation, measured by the Consumer Price Index, stands at 2.4% after rising 0.2% in January, keeping policymakers cautious about declaring disinflation complete.
Higher interest rates are typically negative for high-risk assets such as cryptocurrencies, as they increase borrowing costs and make safer assets like Treasury bonds and cash more attractive.
With crypto market sentiment already weak, any renewed hawkish shift from the Fed could further dampen appetite for speculative assets in the near term.