The Federal Reserve kept the federal funds rate unchanged in the 3.5% to 3.75% range, as expected. Chair Powell stated that the uncertainty surrounding the war's impact on inflation makes future interest rate policy harder to predict. U.S. Treasury yields climbed, and all three major U.S. stock indices fell. Bitcoin (BTC) dropped 5.4% yesterday to around $70,500. Ethereum (ETH) and SOL fell by approximately 6%.

PPI Higher Than Expected, Oil Prices Soar Again

The February Producer Price Index (PPI) released yesterday rose 0.7%, far exceeding the expected 0.3%. This indicates that inflation was already severe before the outbreak of the Iran conflict, and the war has intensified stagflation concerns amidst rising oil prices.

A key Iranian natural gas field was attacked by U.S.-Israel coalition forces on Wednesday, causing a fire and escalating the Middle East conflict. Brent crude rose nearly 4% to close above $107 per barrel. West Texas Intermediate (WTI) crude closed slightly higher at $96.32 per barrel.

Fed Maintains Rates, Highlights War's Inflation Risk

The Fed maintained the federal funds rate target at 3.5% to 3.75%. Chair Powell noted the uncertainty regarding the war's impact on inflation, complicating future policy forecasts.

Although the Fed maintained its projection for two rate cuts in 2026 and 2027, traders have reduced their expectations for rate cuts this year. Powell stated that maintaining moderately restrictive rates is crucial, while acknowledging the Fed's difficult position. Consequently, Treasury yields rose. The S&P 500 fell 1.36%, marking the largest single-day drop on a Fed speech day since 2024.

In its post-meeting statement, the Fed indicated that the economic impact of developments in the Middle East remains uncertain. The Committee will remain highly attentive to the risks regarding its dual mandate.

Bitcoin Falls to Above $70K

Bitcoin dipped 5.4% yesterday to hover around $70,500. ETH and SOL dropped about 6%, sending the total crypto market cap down 3.83% to $2.44 trillion.

According to Coinglass data, $452 million was liquidated within 24 hours, with Bitcoin ($153 million) and Ethereum ($148 million) accounting for the majority.

Glassnode stated in a report this week that spot market signals are mixed but generally constructive. However, on-chain activity remains relatively sluggish, suggesting that overall market confidence has not yet fully recovered.

Inflows into Exchange Traded Funds (ETFs) show recovering institutional confidence. Last week, U.S.-listed spot Bitcoin ETFs saw net inflows exceeding $750 million, marking the third consecutive week of inflows. So far this week, over $400 million has flowed in.

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