JPMorgan anticipates the Fed will raise interest rates next, while cryptocurrency enthusiasts discuss potential rate reductions

JPMorgan Foresees Fed Rate Hike Delayed Until 2027

JPMorgan has projected that the U.S. Federal Reserve’s next move on interest rates will likely be an increase, but not until the third quarter of 2027—a view that diverges from the expectations of many crypto market observers who anticipate rate cuts in the near future.

According to Reuters, the world’s largest bank by market value expects the Fed to keep rates unchanged within a 3.5% to 3.75% range throughout this year, with a 25 basis-point hike not coming until Q3 2027.

This outlook stands in sharp contrast to the CME’s fed fund futures, where traders are betting on two 25 basis-point rate reductions before year-end. Many analysts in the crypto sector also predict falling borrowing costs, which could encourage more risk-taking in both the economy and financial markets. Bitcoin (BTC), often seen as a direct beneficiary of increased fiat liquidity, tends to react more strongly to shifts in interest rate expectations than traditional assets. For more on this, see this analysis.

“Although 2025 may present challenges, bitcoin could rebound in 2026,” commented Lukman Otunuga, senior market analyst at FXTM, in a note to CoinDesk. “A drop in interest rates and a reduced active supply might help support prices.”

Many crypto enthusiasts believe the next Federal Reserve Chair will adopt a more accommodative stance than Jerome Powell, whose term concludes in early May.

JPMorgan’s forecast for higher rates is consistent with bullish technical patterns observed in the 10-year Treasury yield, as discussed by CoinDesk in November. These patterns indicate the benchmark yield could climb toward 6% over the next year, up from its current level of approximately 4.18%.

Nonetheless, the bank noted that a shift toward rate cuts remains possible if economic conditions change. Should the labor market deteriorate or inflation drop significantly, the Fed may still opt to lower rates later this year, according to JPMorgan analysts.

“If we see renewed weakness in the labor market or a substantial decline in inflation in the coming months, the Fed could still consider easing policy before year-end,” the analysts stated. “However, we anticipate that the labor market will tighten by the second quarter, and that the process of disinflation will proceed slowly.”

Other Banks Adjust Rate Cut Expectations

Following the latest U.S. employment report, which showed the unemployment rate falling to 4.4% in December, several major investment banks have revised their forecasts for rate reductions. Goldman Sachs and Barclays now expect the Fed to cut rates in September and December, rather than in March and June as previously predicted.