Macro this week: What to expect from the March 19 FOMC meeting

Following last year's dovish moves by the US Federal Reserve, which adjusted the target range to 4.25%–4.5%, a potential reduction in interest rates could stimulate the US economy and provide a much-needed boost to both cryptocurrencies and stocks. With the next Federal Open Market Committee (FOMC) meeting set for March 19, 2025, investors are watching closely for insights into policymakers' outlook and future plans.

In this article, Bybit explores this week's key macro trend: the upcoming FOMC meeting. But first, let's review last week's most significant US economic reports and their impact on financial markets.

Key Takeaways:

• Job openings exceeded forecasts, rising 232,000 to 7.74 million, while core CPI and PPI came in below expectations, signaling easing inflationary pressures amid a strong labor market.

• A rate cut is highly unlikely on March 19, but the probability of a reduction by June remains substantial.

• While the Fed may take a cautious approach to pausing or slowing quantitative tightening (QT), Polymarket bettors expect QT to end before May 2025.

Jobs, CPI and PPI releases last week

Last week, key macroeconomic reports in the US included job openings, the Core Consumer Price Index (CPI) and the Core Producer Price Index (PPI).

Job openings

In January 2025, US job openings increased 232,000 to 7.74 million, hires rose 19,000 to nearly 5.4 million and layoffs declined (for a fourth straight month) to 34,000. Additionally, a revised December 2024 reading showed 7.508 million vacancies, down from the originally reported 7.6 million.

With job openings exceeding forecasts of 7.63 million, the labor market remains resilient despite the Federal Reserve's restrictive monetary policy.

Core CPI

In February, the CPI for core (and all) items rose 0.2%, slightly below the expected 0.3% increase. On an annual basis, headline inflation reached 2.8% and core inflation hit 3.1%, both 0.1% lower than analysts' forecasts.

This softer-than-expected inflation suggests that price pressures are gradually easing, potentially strengthening the case for a Fed rate cut later this year. However, trade policy uncertainty and tariffs remain key risks.

Core PPI

The PPI, a key measure of pipeline inflation pressures, remained flat in February 2025 after jumping 0.6% in January. This was well below the 0.3% increase expected by analysts, suggesting easing cost pressures on producers.

The unexpected 0.1% decline in core PPI (excluding food and energy) further supports this trend, potentially giving the Fed more flexibility in future rate decisions.

Macro events' impact on crypto and equity markets

Following an 8.3% drop on Mar 10, 2025 after the US job openings report, the combined crypto market cap recovered all losses by March 16, closing the week at $2.75 trillion. Bitcoin followed the same trend, gaining 2.35% over seven days, while Ethereum and Solana posted a 7.24% loss and a 2.18% gain, respectively.

Equity and crypto markets moved in the same direction last week. After a sharp decline on March 10, all three major US stock indices — the S&P 500 (SPX), Nasdaq-100 (NDX) and Dow Jones Industrial Average (DJI) — entered a recovery. However, equity markets closed the week lower, with the SPX, NDX and DJI losing 2.29%, 2.46% and 3.09%, respectively.

FOMC Meeting on Mar 19, 2025: What are investors watching for?

Source: CME Group

The Federal Open Market Committee (FOMC) is widely expected to hold interest rates steady at its meeting on Mar 19, 2025. According to the CME FedWatch tool, there’s just a 1% probability of a rate cut, with a 99% chance that the federal funds rate remains at 4.25%–4.5%. 

Fed Chair Jerome Powell has emphasized that inflation remains above the Fed's 2% target, while the labor market continues to show strength. Given these conditions, policymakers are expected to maintain a cautious stance, waiting for more economic data before adjusting policy.

Although a March rate cut is highly unlikely, investors will focus on signals regarding future policy moves, particularly for the upcoming May and June meetings. The FOMC is set to release updated economic projections, including forecasts for inflation, GDP growth and employment. If these forecasts weaken, the chances of a May rate cut could rise. Powell's press conference will be closely watched for clues about the Fed's timing for potential rate cuts.

While March rate cuts seem to be off the table, a Fed rate cut by June remains a possibility. Based on FedWatch data, there’s an 18% probability of a rate cut in May and a 68.5% chance in June. If the Fed cuts rates in June, there’s a 57.3% probability it will lower the target range to 4.0%–4.25% and an 11.2% chance it will drop to 3.75%–4.0%.

Beyond the immediate rate decision, changes in the Fed's tone will be key. If the Fed expresses less confidence in economic strength, or highlights growing risks from tariffs and fiscal tightening, it could signal a shift toward a more dovish stance. The bond market's reaction will also be crucial, as any shift in the Fed's tone could impact Treasury yields, equities and risk sentiment.

Will Powell pause or slow quantitative tightening (QT)?

Quantitative tightening (QT) is the Fed's process of shrinking its balance sheet by allowing bonds to mature without reinvesting the proceeds. This effectively removes liquidity from financial markets, making borrowing more expensive, and slowing economic activity. The Fed began QT in June 2022 as part of its strategy to combat inflation, complementing interest rate hikes by draining excess liquidity from markets.

With the debt ceiling debate adding uncertainty, some FOMC officials are now considering pausing or slowing QT to prevent liquidity shortages. The Fed has already withdrawn $2.2 trillion from financial markets, and continued reductions could strain bank reserves and money markets. If QT persists at its current pace, liquidity risks may emerge as the Treasury refills its Treasury General Account (TGA). A sudden loss of liquidity could disrupt short-term lending markets, forcing the Fed to intervene before financial conditions deteriorate.

Market sentiment is shifting, with Polymarket bettors assigning a 100% probability of QT ending before May. If Powell signals a slowdown, stocks and cryptocurrencies could benefit from increased liquidity. However, the Fed remains cautious, as an early halt to QT could weaken its inflation-fighting efforts.

March 19 FOMC: A key macro event for financial markets

The Federal Reserve's upcoming March 19 FOMC meeting is a critical event for investors, with markets widely expecting no rate cut, as inflation remains above target and the labor market remains strong.

Meanwhile, last week's economic data showed resilient job openings, softer-than-expected inflation and flat producer prices, signaling a mixed outlook for monetary policy. Additionally, speculation is rising that the Fed may pause or slow quantitative tightening due to debt ceiling concerns. This shift would increase liquidity, potentially boosting risk assets, such as crypto and equities.

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