Federal Reserve Rate Cut Odds Rise Before March Meeting

TLDR

• Odds for a rate cut are 8-9% before March 2026 meeting.
• Jerome Powell maintains rates at 3.50-3.75% after January meeting.
• Diverse Fed opinions on future rate changes impact market predictions.

Odds for a potential Federal Reserve rate cut have risen, driven by recent job market data indicating weaker-than-expected employment figures. The data comes ahead of the Federal Open Market Committee (FOMC) meeting scheduled for March 18, 2026. According to both CME FedWatch and Polymarket data, the probabilities of a 25 basis point cut are between 8-9% despite predominant expectations for no change at 89-91%.

Fed Chair Jerome Powell opted to maintain existing interest rates, ranging from 3.50-3.75%, following the January 2026 meeting. This decision reflects a balance of risks concerning inflation and labor markets. Powell’s term is set to expire in May 2026. Alongside, Kevin Warsh, a potential Fed Chair candidate, faces pressure from former President Donald Trump to advocate for lower rates.

Diverse Federal Reserve Opinions on Rate Movements

There’s notable diversity within the Federal Reserve regarding future rate changes. Incoming Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan have raised concerns about inflation, whereas Philadelphia Fed President Anna Paulson is open to rate cuts by later in 2026. Conversely, Minneapolis Fed President Neel Kashkari highlights risks tied to both inflation and labor dynamics.

The Wells Fargo analysis identifies a mix of voting members: four neutral, six dovish, and two hawkish. Such a composition suggests varied perspectives on how monetary policy should address ongoing economic indicators.

Impact on Cryptocurrencies and Financial Markets

Historically, Federal Reserve rate cuts tend to boost risk assets, including cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), by lowering borrowing costs. This trend encourages liquidity flows into high-yield opportunities such as staking and decentralized finance (DeFi). Markets currently price around 89.1% for no changes but indicate more than an 8% probability for a 25 basis points cut in March per CME FedWatch.

Prediction markets show varying probabilities, with a 16% chance for exactly one cut, 25% for two cuts, and 22% for three cuts in 2026. Broader forecasts anticipate a total reduction of 0.50-0.75 percentage points. Potentially, these developments could place downward pressure on the USD, thereby lifting cryptocurrency prices. However, it should be noted that no specific data correlating these expectations with changes in total value locked (TVL) or liquidity shifts in crypto markets is available in primary sources.

Market Tools and Predictions

Data from various market tools indicate different predictions regarding rate adjustments. The CME FedWatch Tool shows high probabilities for maintaining current rates but considers possibilities for cuts. Similarly, Polymarket betting suggests varying expectations for the number of rate cuts, while Kalshi provides a detailed count on probable cuts through 2026.

A JPMorgan report on the January 2026 Fed meeting highlights these developments and the factors influencing market perceptions. Though, neither crypto experts nor recent regulatory updates provide substantial directives on the impact of possible rate cuts.