Half the Federal Reserve’s policymakers now see interest rates going up, not down, before the year is out. That’s a problem for anyone betting on cheaper money.

The Fed’s June 17 meeting ended with a unanimous decision to hold the federal funds rate at 3.50%-3.75%, the fourth consecutive pause. But the real story wasn’t the hold. It was buried in the dot plot, the chart where each official anonymously marks where they think rates should be headed.

The dot plot tells a hawkish story

Nine out of 18 officials who submitted projections now anticipate at least one rate hike before December. Six of those nine expect two or more increases. For context, earlier projections had suggested potential rate cuts during 2026. The committee has effectively flipped its stance.

The math shows up clearly in the median projection. The expected federal funds rate at year-end climbed to 3.8%, up from 3.4% in the March Summary of Economic Projections. That 40-basis-point jump in a single quarter is not subtle.

Chair Kevin Warsh, who took over leadership of the committee, notably did not submit a dot for the June meeting. That’s an unusual move that leaves his personal policy preference opaque, even as the institution he leads grows more hawkish around him.

Inflation projections tell the real story

The median PCE inflation projection for 2026 was revised sharply upward to 3.6%, compared to 2.7% in the March forecast. In English: officials now expect prices to rise roughly a third faster than they thought just three months ago.

GDP growth expectations were modestly trimmed in the new projections, adding another wrinkle. The committee is simultaneously seeing hotter inflation and softer growth, a combination that makes policy decisions genuinely difficult.

What this means for markets and crypto

Markets didn’t wait for an engraved invitation to react. Treasury yields climbed higher and equity prices fell following the meeting, a textbook response to hawkish surprise from the central bank.

For crypto specifically, the implications are worth thinking through carefully. Bitcoin and other digital assets have historically shown sensitivity to liquidity conditions and real interest rates. The shift from anticipated cuts to potential hikes represents a significant change in the macro backdrop for digital assets.

There’s also the dollar strength factor. Higher US rates typically strengthen the dollar, which can create additional pressure on Bitcoin and other crypto assets that often trade inversely to dollar strength.