THE FED WILL NOT RAISE INTEREST RATES IN 2026 - OPPORTUNITY WITH CRYPTO

1) Monetary policy

Rate cut: The FOMC cut an additional 25 basis points (0.25%), bringing the federal funds rate to 3.50% – 3.75%. This is the third consecutive cut in 2025 (total -75 bps since 9/2025).

Divided vote (9–3):

2 members opposed because they wanted to keep the interest rate unchanged (Austan Goolsbee, Jeff Schmid)

1 member wanted a stronger cut of 50 bps (Stephen Miran)

2) Economic outlook (SEP)

GDP growth: The 2026 GDP forecast has been raised to 2.3% (from 1.8% previously), with supporting factors such as steady consumer spending, the impact of AI, and fiscal policy.

Inflation: Core PCE is expected to be about 2.5% by the end of 2025 (down from around 3% currently) and continues to trend toward the 2% target in 2026. However, the Fed still acknowledges inflation is higher than expected.

Labor market: Unemployment in 2026 is expected to stabilize at 4.4%. The risk of job loss has increased due to a cooling labor market, but the Fed does not forecast a sharp increase in unemployment.

Dot plot: FOMC members forecast only 1 cut of 25 bps in 2026 → indicating the Fed is shifting to a more cautious state / “wait and see”.

3) Highlights from the press conference of Chairman Jerome Powell (10/12/2025)

Regarding the cut: The Fed has reduced 75 bps since September, bringing rates closer to neutral and “in a good position to wait and see”. Powell stated that the December decision was a “close call” rather than something “set in stone.”

Regarding risks: There is consensus that inflation remains high and labor is softening, with differences lying in how to balance risks; the risk of job loss has increased in recent months.

Regarding rate hikes: Powell has almost ruled out the scenario of a rate hike in the short term; emphasizing that the Fed will look at data with a “skeptical eye".