Analysts at JPMorgan, the world's largest bank, believe the Federal Reserve will maintain its key interest rate in the current range of 3.5-3.75% throughout 2026, according to Reuters.
The regulator may consider a 25 basis point cut around the second half of next year.
Previously forecasting a shift in monetary policy, Goldman Sachs and Barclays have also pushed back their expected rate cuts to September and December. Morgan Stanley believes the Fed will not make a decision before June.
These financial institutions have revised their forecasts amid the conflict between U.S. President Donald Trump and Fed Chair Jerome Powell. Powell had previously stated that the White House threatened him with criminal prosecution for refusing to comply with Trump's demands to lower the key interest rate.
JPMorgan's scenario diverges from market expectations. According to CME FedWatch, traders are pricing in at least two rounds of monetary easing.
Many crypto analysts share a similar view, expecting that cheaper loans will increase risk appetite and positively impact risk assets, including cryptocurrencies, as noted by crypto analysts.
However, the bank's specialists have left room for maneuver. They stated that a rate cut would become relevant if the labor market weakens or inflation slows down.
“If the labor market shows weakness in the coming months or inflation significantly decreases, the Fed may still shift to easing policy. However, we expect that by the second quarter, the labor market will tighten, and the process of slowing inflation will be very gradual,” JPMorgan clarified.
Favorable Environment
VanEck stated that the first quarter of 2026 will see an increase in risk appetite due to newfound clarity in fiscal and monetary policy.
— VanEck (@vaneck_us) January 12, 2026
“As we enter the new year, markets are operating under a level of predictability that investors haven’t experienced in years,” analysts noted.
One key factor they highlighted is the “gradual improvement of the fiscal situation in the U.S.”:
“Although budget deficits remain high, they are decreasing as a percentage of GDP compared to record levels during the pandemic.”
Experts believe that stabilizing fiscal and tax policy helps keep long-term interest rates in check and reduces the likelihood of extreme market events.
A risk-friendly environment is considered favorable for digital assets and stocks in technology and AI sectors. However, following the October crash, Bitcoin has lost correlation with stock and gold markets.
Experts also pointed out the difficulty in making short-term price predictions for the leading cryptocurrency due to disruptions in the theory of four-year cycles.
Notably, analysts predicted Bitcoin could rise to $100,000 in January. They stated that outflows from digital gold have bottomed out, and the cryptocurrency has entered a recovery phase.