Meeting minutes by the Federal Open Market Committee (FOMC) have hinted at a possible rate hike. This comes despite a drop in inflation and at a time when the crypto market is attempting to find a bullish momentum. The focus, as stated, could be on choosing inflation or the labor market before taking a call.
FOMC Minutes Signal Rate Hike
The US January 2026 inflation dropped to 2.40%, closer to the target of 2%; however, Federal Reserve officials have indicated that rate cuts could be paused for some time. This was speculated – what was now speculated was that a rate hike could be on the table.
Minutes from the Jan 27-28 meeting have opened up a possibility for the same.
A debate is expected to happen over which sector should have more focus, inflation or the labor market. Officials are seeking a balanced inflation level before slashing the rate, per a report by CNBC. The summary has said that a downward adjustment would be likely if inflation were to decline according to expectations.
Simply put, there is a chance for the Federal Reserve to keep the rate steady. If anything, there could be a discussion around upward adjustment to better reflect a two-sided description on the interest rate decisions of the Committee.
San Francisco Federal Reserve President Mary Daly recently cited something similar, saying that the US central bank still needs to get inflation down.
Current Situation
The federal rate is between 3.50% and 3.75%, with US President Donald Trump earlier calling out the need to lower the lending rate. The last cut was announced in December 2025, and the rate has remained unchanged since then.
Attention is on the labor market because the unemployment rate has dropped only slightly to 4.3% in January 2026 from 4.4% in December 2025. Some relief has come up in the form of an increase by 130k in non-farm payroll. A slight misjudge or calculation could take inflation away from the target value of 2%.
Trouble in Crypto Market?
The crypto market is familiar with volatility and uncertainty. But, a rate hike could shrink investors’ appetite to allocate their funds to the sector. For now, Coinglass has reported a total liquidation of $38.73 million in the last 12 hours. This consists of $22.08 million in long and $16.66 million in short.
BTC has seen more short liquidations during this time. The figure stands at $7.01 million, out of the individual total value of $9.56 million. This has left $2.55 million in long. The market has collectively shed 1.55% of its value in terms of market cap, with a shift to 11 points in FGI.
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