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The Federal Reserve is scheduled to release its interest rate decision, updated dot plot, and economic projections at 2 PM ET today. Markets are entering the decision with heightened uncertainty, as an energy supply shock tied to the Strait of Hormuz continues to complicate the Fed’s outlook for inflation and the path of rate cuts.
In an effort to ease pressures from the energy supply crisis linked to the Iran conflict, the International Energy Agency (IEA) said it coordinated the largest emergency oil reserve release in its history. The IEA reported that 32 member countries agreed to release a record 400 million barrels.
Despite the scale of the release, oil prices have not fallen meaningfully. Brent is up 10% since the announcement on March 11 and is trading again above $100 per barrel. The IEA release is described as insufficient to offset the physical supply disruption affecting the Strait of Hormuz.
On March 11, the IEA said the 400 million barrel release was more than double the 182 million barrels released after the Russia-Ukraine conflict began in 2022. The United States contribution is 172 million barrels over 120 days, or roughly 1.4 million barrels per day. The release was reported to cover around 15% of the supply lost from the Hormuz closure.
Economist Nabil al-Marsoumi estimated that oil is carrying a $40 per barrel risk premium above levels justified by fundamentals. The article argues that if the largest emergency reserve operation in history could not bring prices below $100, then energy-driven inflation may be less “transitory” and more structural while disruptions persist in the Strait of Hormuz.
The Fed’s decision comes amid escalating geopolitical risk. Mojtaba Khamenei was named Iran’s supreme leader on March 9, days after Ali Khamenei was killed in U.S.-Israeli strikes on February 28. His first public statement, read on state television, indicated that disruptions in Hormuz could prolong, with a vow that “the lever of blocking the Strait of Hormuz must continue to be used,” according to CNBC.
On Monday, Israel killed the head of Iran’s Revolutionary Guards Basij force, Gholamreza Soleimani. The article suggests the strike is more likely to harden Iran’s posture than soften it.
The article points to immediate economic effects from the Hormuz disruption. Cathay Pacific announced a 105% fuel surcharge increase effective today, March 18, raising the surcharge from $72.90 to $149.20.
Core PCE is reported at 3.1%, above the 2% target. The article notes that this figure was collected before the oil shock fully worked its way into consumer prices, implying that upcoming CPI reports for March and April may show more damage.
With no ceasefire or visible negotiation framework and a new supreme leader explicitly committed to using Hormuz as leverage, the article frames today’s dot plot as more than a rate forecast—effectively a projection of how long policymakers expect the shock to last and how much of it they are willing to look through.
Bitcoin is trading above $74K after a breakout on Monday that reportedly wiped out hundreds of millions in shorts. The article says the move was likely driven by forced closure of bearish positions, including unwinding of put-option hedges around the $55K to $60K range.
GoInGlass data cited in the article shows that over $568 billion in short positions were liquidated in the past two days. It also cites SoSo Value data indicating that this month has already seen net inflows of $1.74 billion and a seven-day inflow streak, described as the strongest signs of institutional buying pressure returning since early October.
The article links the current risk-on positioning to expectations that the Fed will maintain a path consistent with one rate cut this year. It states that if the dot plot holds at one cut, markets may interpret the oil shock as temporary and growth concerns as outweighing inflation concerns—potentially supporting a move toward the $80K area for Bitcoin.
Conversely, if projections shift to zero cuts in 2026, the article warns that the breakout could unravel quickly, with $70K identified as a key level to watch.
The article also cites Phemex Research, saying Bitcoin has dropped after seven of the last eight interest rate decisions. It adds that price lows have tended to occur within 48 hours after the event, making March 20 a key window if the pattern holds.
While the interest rate decision itself is described as largely priced in—CME FedWatch data indicates a 98.9% probability that rates are held—the focus is on the dot plot and economic projections. The article says the current baseline is one rate cut this year, and any shift is likely to affect risk assets.
After the data, traders and analysts will also monitor Powell’s conference at 2:30 PM. The article suggests that if the dot plot remains unchanged but Powell takes a hawkish tone—emphasizing “data dependence” while sidestepping the oil shock—markets could enter a period of consolidation rather than trend.
It adds that Bitcoin could consolidate in the $73K–$76K range as participants wait for clearer inflation signals in April, and that Powell’s characterization of the oil shock—whether “transitory” or “structural”—may define the macro outlook for Q2.
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