Federal Reserve Holds Rates Steady, War Escalates Inflation Risks, Bitcoin Pulls Back Above 70K

The Federal Reserve has kept the federal funds rate unchanged at 3.5% to 3.75%, as expected. Chairman Powell stated that the impact of the war on inflation is uncertain, making future interest rate policies more difficult to predict. U.S. Treasury yields rose, and the three major U.S. stock indices declined. Bitcoin (BTC) dropped as much as 5.4% yesterday, to around $70,500. Ethereum (ETH) and SOL fell approximately 6%.

PPI exceeds expectations, oil prices surge again

The Producer Price Index (PPI) for February increased by 0.7%, far above the expected 0.3%. This indicates that inflation was already severe before the outbreak of the Iran war, and the conflict has intensified concerns about stagflation amid rising oil prices.

A key Iranian natural gas field was attacked and set on fire by U.S.-Israeli coalition forces on Wednesday, escalating Middle East tensions. Brent crude oil rose nearly 4%, closing above $107 per barrel. U.S. West Texas Intermediate (WTI) crude closed slightly higher at $96.32 per barrel.

Federal Reserve maintains rates, emphasizes war risks to inflation

The Fed kept the federal funds rate steady at 3.5% to 3.75%. Chairman Powell said that the impact of the war on inflation is uncertain, making future rate policies harder to forecast.

Although the Fed maintains expectations of two rate cuts in 2026 and 2027, traders have reduced expectations for rate cuts this year. Powell emphasized that maintaining moderate tightening is crucial and noted the Fed’s difficult position. As a result, U.S. Treasury yields rose. The S&P 500 fell 1.4%, marking the largest single-day decline since the Fed’s speech in 2024.

The Fed’s post-meeting statement indicated that the development of Middle East tensions remains uncertain for the U.S. economy. The committee is closely monitoring the risks to its dual mandate.

Powell stressed that to resume rate cuts, officials need to see progress in reducing inflation.

Bitcoin drops back above $70,000

Bitcoin fell as much as 5.4% yesterday, to around $70,500. Ethereum and SOL declined about 6%, and the overall crypto market cap decreased by 3.83% to $2.44 trillion.

According to Coinglass data, liquidations in the past 24 hours reached $463 million, with Bitcoin accounting for $158 million and Ethereum $150 million.

Glassnode reported this week that on-chain signals are mixed but overall constructive, though activity remains relatively subdued, indicating market confidence has not fully recovered.

Funds flowing into exchange-traded funds (ETFs) show institutional confidence is returning. Last week, U.S.-listed spot Bitcoin ETFs saw net inflows of over $750 million for the third consecutive week. So far this week, more than $400 million has also flowed in.

This article, “Federal Reserve Maintains Rates, War Intensifies Inflation Risks, Bitcoin Falls Back Above $70,000,” first appeared on Chain News ABMedia.