Analysts at JPMorgan, the world’s largest bank, believe that the Fed will maintain its key rate within the current range of 3.5-3.75% throughout 2026, according to Reuters.
The regulator might consider a 25 basis point cut around the second half of next year.
Previously, Goldman Sachs and Barclays, who had forecasted a loosening of monetary policy, postponed their expectations for a rate cut to September and December. Morgan Stanley anticipates that the Fed will not make such a decision before June.
Financial institutions revised their forecasts amid the conflict between U.S. President Donald Trump and Fed Chair Jerome Powell. Powell had stated that the White House threatened him with criminal prosecution for refusing to comply with the President’s demands to lower the key rate.
JPMorgan’s scenario diverges from market expectations. According to CME FedWatch, traders are pricing in at least two rounds of monetary easing.
This view is shared by many crypto analysts. They expect that cheaper credit will boost risk appetite and positively impact risky assets, including cryptocurrencies.
However, bank specialists left room for maneuver. They noted that a rate cut would become relevant if the labor market weakens or inflation slows.
“If the labor market shows weakness in the coming months or inflation significantly decreases, the Fed might still move towards easing policy. However, we expect the labor market to tighten by the second quarter, and the process of slowing inflation to be very gradual,” JPMorgan clarified.
Favorable Environment
VanEck stated that the first quarter of 2026 will be a period of increased appetite for risky assets due to newfound clarity in fiscal and monetary policy.
— VanEck (@vaneck_us) January 12, 2026
“As we enter the new year, markets are operating with a predictability that investors have not experienced in years,” analysts noted.
One of the key factors they cited was the “gradual improvement in the U.S. fiscal situation”:
“Although budget deficits remain high, they are decreasing as a percentage of GDP compared to the record levels during the pandemic.”
Experts believe that the stabilization of fiscal policy helps contain long-term interest rates and reduces the likelihood of extreme market events.
A high-risk appetite environment is considered favorable for digital assets and stocks of technology and AI companies. However, after the October crash, Bitcoin lost its correlation with equity and gold markets.
Experts also pointed out the difficulty of short-term price forecasts for the leading cryptocurrency due to the disruption of the four-year cycle theory.
Earlier, analysts predicted Bitcoin would rise to $100,000 in January. They noted that the outflow of funds from digital gold had reached its bottom, and the cryptocurrency has now entered a recovery phase.