As oil prices surge and inflation remains elevated, the Federal Reserve is expected to keep interest rates unchanged, but its hawkish stance on potential rate cuts in 2026 may weaken dollar liquidity, pushing Bitcoin towards critical support levels. Currently, the year-over-year Headline CPI growth stands at 2.4%, unchanged from January, with core inflation around 2.5%, while the three-month core trend approaches an annualized rate of nearly 3%. Although this backdrop does not necessitate an immediate rate hike, it seems too warm for the narrative of 'rate cuts after a soft landing' that supports Bitcoin's rise. Meanwhile, since the January meeting, crude oil prices have risen over 50%, and the intensification of the Iran conflict has exacerbated instability in the energy market, raising the Fed's recent inflation expectations. Former Fed officials now anticipate that inflation this year will be close to 3%, rather than the 2.4% predicted by the Fed last December, highlighting the risk that today’s economic forecast summary may marginally become more hawkish.
