The U.S. Federal Reserve kept its policy rate unchanged at 3.5 to 3.75 percent at its March Federal Open Market Committee meeting, while leaving open the possibility of rate cuts later this year. On April 9, blockchain media outlet Cointelegraph reported on the minutes of the March 17 to 18 meeting released the same day.

The meeting voted 11 to 1 to hold rates. The key issue was differences in internal views on the future path of rates. A majority of officials saw it could be appropriate to lower rates if inflation slows as expected. The minutes said many participants judged that, if inflation declines along the expected path, it is likely that lowering the target range for the policy rate would become appropriate over time.

Still, it is difficult to say the Fed has broadly leaned toward cuts. Some officials saw a need to keep the rate statement language open to both upside and downside. The minutes stated that some participants judged that, if inflation remains above the target level, raising the target range for the policy rate could be appropriate.

The war in the Middle East emerged as a key variable in the discussion. Officials were carefully watching how the possibility of additional conflict could affect the U.S. economy. The overall tone did not completely rule out rate cuts this year, but was closer to the view that it is still too early to judge the economic impact of the Middle East situation. The Fed shared the view that it is too early to know what effect developments in the Middle East will have on the U.S. economy.

In cryptocurrency markets, expectations of rate cuts typically work in a supportive direction. That is because market liquidity can increase and appetite for risk assets can revive. The Fed last cut the policy rate by 25 basis points on Dec. 10 last year. The minutes did not fully dampen expectations for cuts this year, but delivered mixed signals to markets by leaving the option of rate hikes on the table in the face of the possibility of renewed inflation.

Concerns about the job market were also raised. Several officials saw the labor market as vulnerable to shocks at a time when net job gains are low. The minutes included an assessment that, with net job creation running at a low pace as it is now, labor market conditions appear vulnerable to adverse shocks. Along with inflation, the possibility of weakening employment has emerged as another variable in future rate decisions.

Markets are placing more weight on the likelihood of maintaining current policy settings than on an immediate sharp shift. According to CME Group's FedWatch tool, the probability that the policy rate will be maintained at 3.5 to 3.75 percent at the Dec. 8 year-end meeting was tallied at 75.6 percent. The probability of a rate cut was 20.4 percent, and the probability of a rate hike was 2.4 percent.

The next FOMC meeting will be held on April 28 to 29. The Fed is expected to recheck the rate direction while looking at whether the Middle East war spreads, the pace of inflation easing and the possibility of labor market shocks. The cryptocurrency market is also closely watching whether expectations for cuts this year will translate into actual policy signals.