The US Federal Reserve is expected to hold interest rates steady today despite President Donald Trump continuing to pressure Fed Chair Jerome Powell to lower rates. However, rising oil prices due to the Iran war have put a Fed rate hike back on the table. Meanwhile, China plans to release its massive oil reserves to soften the impact.
US CPI Inflation May Rise to 3.4%, Pushing Fed Rate Hike
Crypto market research firm 10x Research warned that surges in crude oil prices, driven by ongoing Middle East conflicts and oil supply disruptions through the Strait of Hormuz, would alter the macroeconomic outlook.
10x Research’s regression model indicated that elevated oil prices will push US CPI inflation from 2.43% to almost 3.4%. While the latest PCE inflation data did not reflect risks, the firm noted that inflationary pressure “would fundamentally change the market narrative.”
The US Federal Reserve may have to abandon rate cut expectations, with a Fed rate hike coming earlier than expected. JPMorgan predicted no Fed rate cut in 2026. Barclays, Goldman Sachs, and Morgan Stanley also postponed their Fed rate cut calls.
Expected US CPI Inflation. Source: 10x ResearchFed rate hike will cause renewed selling pressure on Bitcoin. As CoinGape reported, Citigroup cut its 12-month Bitcoin target to $112,000 and Ethereum price target to $3,175. Citigroup warned that BTC could even drop to $58,000 and Ethereum to $1,198 amid macro jitters.
China Mulls Releasing 1.4 Billion Barrels of Oil Reserves
While rising oil prices will impact US equity and crypto markets, Bloomberg reported on March 18 that China plans to release its massive crude oil reserves. China’s total crude reserves, including strategic and commercial holdings, are estimated at up to 1.4 billion barrels. This even exceeds the US Strategic Petroleum Reserve.
China Crude Oil Stockpiles. Source: BloombergThe massive oil stockpiles will provide China with several months of supply even if the US-Iran war continues. State-owned refiners are expected to prioritize gasoline and diesel production over chemicals to safeguard the domestic fuel supply, said GL Consulting.
WTI crude oil futures fell 1% to $95 per barrel today, whereas Brent crude oil futures jumped 1.30% to $104 per barrel. Bitcoin tumbled more than 1.5% to under $73,000 as traders reacted to oil shock, persistent inflation, and signs of a softening US labor market.
Source: https://coingape.com/10x-research-warns-us-fed-rate-hike-cpi-rising-3-4-while-china-taps-1-4-bln-oil-reserves/
