Main Impacts of the Fed's Rate Cut Policy (2026 Perspective)

The core of the Federal Reserve's rate cut policy is to stimulate the economy by lowering the federal funds rate, currently maintained within the range of 3.50%-3.75% (after the last 25-basis-point cut in December 2025). In 2026,分歧 within the Fed on the rate cut path has increased; the median projection in the dot plot predicts only one rate cut (25 basis points), but major institutions such as Goldman Sachs and Morgan Stanley expect 2–3 cuts (cumulative 50–75 basis points). Market probabilities suggest only around 15% chance of a cut in January, with greater bets on cuts in March or June.

Positive Impacts:

Stimulating Economic Growth: Rate cuts lower borrowing costs, making it easier for businesses to finance expansion, and making consumer loans (such as mortgages and auto loans) cheaper, thus boosting consumption and investment. U.S. GDP growth forecast for 2026 has been revised upward to approximately 2.3%.

Bullish for Stocks: Low interest rates enhance expectations of corporate profitability, driving capital into riskier assets. U.S. equities (e.g., S&P 500) often rise during rate cut cycles, with historical data showing strong market performance during such periods.

Strength in Cryptocurrencies: Increased liquidity boosts investor preference for high-risk assets, benefiting cryptocurrencies like Bitcoin. If multiple rate cuts occur in 2026, it could drive both retail and institutional capital back into the crypto market.

Weaker Dollar: Rate cuts reduce the attractiveness of the U.S. dollar, benefiting emerging markets and assets such as gold.

Negative or Uncertain Impacts:

Inflation Risk: If rate cuts are too rapid, combined with tariff policies, inflation may remain sticky (core PCE expected at 2.5%), limiting further monetary easing.

Labor Market Pressure: Unemployment rate could rise to 4.6%. While rate cuts aim to stabilize employment, lack of clear economic recovery may trigger recession concerns, leading to market volatility.

Political Factors: Powell's term ends in May 2026. The new chair (possibly more dovish) may be influenced by Trump, pushing for further cuts, but the Fed's independence would be tested.

Overall, the Fed’s policy in 2026 is expected to be moderately accommodative, favoring risk assets (such as equities and crypto), but with limited scope and strong dependence on economic data. Investors should closely monitor employment and inflation data. Not financial advice. High market risk! Thank you for liking and following #ETH巨鲸动向 #比特币流动性