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Key Takeaways
US interest rates remain steady overnight, with updated economic guidance coming from the Federal Reserve.
The Committee now expects inflation to rise in 2026 from 2.4% to 2.7%.
Chart of the week: US Fed Policy Projections. How forecasts for 2026 have changed.
After this week’s US Federal Reserve meeting we have an update on what policymakers are thinking regarding the rest of 2026. So, I'm back again to simplify how these forecasts and economic decisions tie back to crypto. While we don’t know exactly what’s going to happen, we can build a few scenarios.
Following how global leaders of economic policy are interpreting what is going on in the macro scene has been a core theme of Squawk’s, both this year and in 2025, particularly in the States.
There is no favouritism here for the US – but they are the largest consumer base on the planet, and consumers drive economic growth. As a reminder, policy makers in the US have a dual mandate. To ensure growth and employment remains steady, while also keeping inflation under control. That’s the tightrope they walk.
And after what’s been an impressive few weeks for crypto, with the total market cap now sitting at circa $2.44 trillion USD, an 18% gain from the February lows, interpreting this latest information from the US can help us understand how the market may react next.
Let's dig in.
Jobs
Let's talk about jobs first, and what we now know looking at the data in March so far.
We know that the jobs market in the US has continued to show signs of stress, with the official unemployment rate rising from 4.3% to 4.4%. This is despite expectation for the figure to remain flat.
As we talked about last week, there has been notable stresses on the employment space as companies continue to shed weight to fund or offset costs associated with AI infrastructure or solutions.
Jerome Powell had this to say in his press conference opening speech.
“Job gains have remained low. A good part of the slowing in the pace of job growth over the past year reflects a decline in the growth of the labor force, due to lower immigration and labor force participation, though labor demand has clearly softened as well”.
Inflation
The Fed acknowledged that, in the official statement on March 18, “Inflation remains somewhat elevated”. Inflation is not yet back where the Fed wants it, but the labour market is no longer strong enough to force the Committee into a tougher posture just to prove a point. So, once again, they have to toe the line.
That may explain why we saw their guidance allow for a higher ceiling on inflation, despite it remaining sticky.
Let's take a look at what this could mean for the markets.
Chart of the week: US Fed Policy Projections
Now we get to drive into the juicy stuff; how does it all come together, what could it all spell for risk assets. Below is a table from the FOMC economic projections which are released quarterly, and it highlights the three topics we covered today. Growth (GDP), jobs and Inflation (PCE and core PCE). This is the foundation of how policy makers build a view on what to expect for the rest of 2026 and beyond. It also provides an insight into how their view has changed since the last meeting in December.
Key takeaways
Growth is expected to rise – that doesn’t come from the economy slowing down.
Unemployment is expected to remain steady in the near-term, and fall into the future.
And inflation expectations for 2026 have risen, more than we can see in 2027 and beyond.
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In the near-term it seems policy makers are ready to make changes that may increase the rate of inflation to support jobs and extend growth targets. And with no rate increase on the horizon, even with inflation rising, that could be evidence there is little appetite to put more pressure on the market.
Tie this into what we know now. Jobs are not really strengthening, and expectations for inflation have already hinted higher. This is a key trend to follow.
This could mean a few scenarios for crypto. If we see inflation rise, that can be due to a variety of reasons. One might come from a form of stimulus policy, which we have seen in the past when the labour market is at deteriorating and government comes in with some kind of easing.
This is similar to what we saw during the covid period, where a rapid decline in productivity and employment was met with cash injections back into the economy, which played a role in greater discretionary spending through 2021’s bull market. We are not saying a similar event is on the horizon, but that’s a recent example of a policy shift to buffer job losses.
On the other hand, if we do see pain on the horizon for the employment market, that could also more immediately add further selling pressure on risk assets, like crypto. So there is the two sides to consider moving forward.
We’ll be here to keep following this and see how it plays out. See you all again next time.