The US Federal Reserve’s divided outlook on interest rates is expected to shape crypto market momentum into 2026.
The central bank cut rates three times in 2025, with the latest reduction in December.
Those moves lowered the benchmark rate to a range of 3.5% to 3.75%.
Despite easing in 2025, projections suggest limited further cuts next year.
Current forecasts point to only one additional rate cut in 2026.
Rates remain at their highest levels since 2008.
Policymakers are weighing labour market data, inflation trends and economic growth.
Inflation risks linked to tariffs are also influencing decision-making.
The Federal Reserve will undergo a leadership change in May.
Jerome Powell’s term as chair is set to end at that time.
President Donald Trump is reportedly considering more dovish candidates.
The Fed’s January meeting will be closely watched by markets.
It marks the first opportunity to update guidance for the year.
CME Group data shows markets price only a 20% chance of a January cut.
Expectations rise to about 45% for a cut in March.
The December dot plot highlighted deep divisions among policymakers.
Equal numbers projected zero, one or two cuts for 2026.
The split has increased uncertainty across financial markets.
Median projections suggest rates near 3.4% by the end of 2026.
That path implies just one rate cut over the year.
Charles Schwab analysts said the updated projections were not particularly hawkish.
Twelve of nineteen policymakers still expect at least one cut.
CoinEx Research chief analyst Jeff Ko said the dot plot shows no clear consensus.
In my view, the Fed is likely to deliver two rate cuts in 2026.
Jeff Ko said.
He expects a pause in January followed by a possible March cut.
Ko said softer labour markets could justify further easing.
BTSE chief operating officer Jeff Mei outlined multiple scenarios for early 2026.
The base case is one cut in Q1 with continued Treasury bill buybacks.
Jeff Mei said.
He added this could support liquidity flows into crypto.
A more aggressive easing scenario could boost risk-on demand.
However, renewed inflation could force the Fed to halt easing.
Such an outcome could pressure both equity and crypto markets.
Arctic Digital head of research Justin d’Anethan said expectations have cooled.
The Fed seems accommodating but still very cautious.
Justin d’Anethan said.
He noted that measured policy may limit near-term crypto euphoria.
Analysts agree rate policy will remain a key driver for crypto in 2026.
At the time of reporting, Bitcoin price was $88,565.01.