In a significant shift, global banking giant JPMorgan Chase has revised its outlook for the Federal Reserve, no longer expecting any interest rate cuts in 2026. The bank's analysts, reassessing the economic landscape after disappointing U.S. jobs data, now predict the Fed will hold rates steady throughout the year. This marks a reversal from their earlier anticipation of a 25 basis point cut.
The immediate market reaction was pronounced, with Bitcoin's price falling to around $90,000 following the announcement. Trading volume surged by 150% as investors adjusted to the prospect of a prolonged period of tighter monetary policy. JPMorgan's stance is not isolated; other major institutions including Goldman Sachs, Barclays, and Morgan Stanley have also pushed back their expectations for Fed rate cuts. Goldman Sachs, for instance, now forecasts two cuts in mid-2026 instead of earlier in the year.
The bank's analysis cites slower-than-expected improvement in the U.S. labor market as the primary rationale, with recent payroll and unemployment data showing weaker growth. JPMorgan's base case scenario anticipates the Federal Funds rate remaining unchanged, with the next projected move being a modest 25 basis point hike not until the third quarter of 2027. This "higher-for-longer" forecast directly challenges prevailing market sentiment, as reflected in the CME Group's FedWatch Tool, which shows traders pricing in a high probability of two 25 bp cuts before the end of 2025.
JPMorgan did outline a conditional path for rate cuts, noting they could re-emerge if the labor market weakens again or if inflation slows more rapidly than their baseline model assumes. However, the prevailing view signals that the Fed may maintain a restrictive policy stance to ensure inflation is durably tamed, potentially cooling investor interest in risk assets like Bitcoin, which often thrives as a hedge against inflationary monetary policy.
