The Federal Reserve just reminded everyone who’s really in charge of market vibes. Minutes from the April 28-29 FOMC meeting, released on May 20, show a majority of Fed officials openly discussing the possibility of raising interest rates if inflation refuses to cool down.

Inflation clocked in at 3.3% year-over-year as of March 2026. That’s well above the Fed’s 2% PCE target, and officials are clearly losing patience.

What the FOMC minutes actually say

The federal funds rate has been parked at 3.50% to 3.75% since at least March 2026. For months, the consensus view was that the next move would be a cut. That consensus is now evaporating.

The minutes reveal that a majority of Fed officials are prepared to hike rates if inflation stays stubbornly elevated.

Market-implied probabilities tell the story clearly. The odds of a rate cut in June 2026 have collapsed to around 5%. Meanwhile, platforms like Polymarket are pricing in a 31-37% chance of a rate hike later this year.

The primary culprit behind persistent inflation is escalating global energy prices, driven by geopolitical tensions in the Middle East, particularly involving Iran.

Why crypto should be paying attention

Here’s the thing about interest rate policy and digital assets: they have an inverse relationship. When rates go up, the US dollar strengthens. When the dollar strengthens, risk assets like Bitcoin and altcoins tend to suffer.

The hawkish signal from the Fed has already reinforced bearish sentiment across digital asset markets.

The bigger picture

Adding another layer of complexity, there’s an ongoing leadership transition discussion at the Fed. Kevin Warsh has emerged as a potential successor to the current chair, and his reputation leans decidedly hawkish.

For investors navigating this environment, the immediate focus should be on upcoming inflation data releases and subsequent Fed communications. If the next few CPI and PCE readings show inflation moving meaningfully toward 2%, the rate hike narrative could soften. But if March’s 3.3% reading turns out to be a floor rather than a ceiling, the probability of an actual hike will only climb from here.

One thing worth watching closely is how Bitcoin correlates with equities in this particular cycle. In 2022, Bitcoin moved in near-lockstep with the Nasdaq during the Fed’s tightening campaign.