While global markets eagerly anticipate the Federal Reserve’s next move, largely betting on imminent interest rate cuts, Wall Street giant JPMorgan Chase has delivered a strikingly contrarian forecast. The banking behemoth predicts the U.S. central bank will maintain its current interest rate levels throughout 2024, with the next policy adjustment not expected until the third quarter of 2027 – and critically, it’s more likely to be a hike than a cut. This outlook stands in sharp contrast to the prevailing sentiment, particularly within the cryptocurrency community.
According to a report by Reuters, JPMorgan analysts project the Fed will hold its benchmark interest rate steady within the 3.5% to 3.75% range for the entirety of this year. Their long-term view suggests a 25-basis-point (one-quarter percentage point) rate hike will be implemented in Q3 2027, signaling a prolonged period of monetary policy stability before a tightening move.
This forecast sharply diverges from broader market expectations. The CME FedWatch Tool, a widely referenced indicator, shows traders are heavily pricing in at least two 25-basis-point rate cuts before the end of 2024. Many cryptocurrency analysts echo this sentiment, believing that reduced borrowing costs would reignite risk appetite across the economy and financial markets, providing a significant bullish catalyst for assets like Bitcoin.
Lukman Otunuga, Senior Market Analyst at FXTM, encapsulates this crypto optimism: “Despite a potentially challenging 2025, Bitcoin could experience a robust rebound in 2026, fueled by shrinking active supply and the anticipation of rate cuts.”
Adding another layer to market speculation, crypto enthusiasts are also looking to the potential appointment of a new Federal Reserve Chair. Current Chair Jerome Powell’s term concludes in May, with many expecting his successor to adopt a more dovish stance, potentially accelerating the path to lower rates.
Interestingly, JPMorgan’s hawkish prediction finds an unexpected echo in recent technical patterns observed in the 10-year U.S. Treasury yield. This crucial global benchmark for asset pricing currently hovers around 4.18%, but the identified patterns suggest it could surge to a challenging 6% within the next year. Such a scenario would undoubtedly exert considerable downward pressure on highly valued assets and riskier investments, aligning with the implications of a sustained higher-rate environment.
Despite their firm stance, JPMorgan analysts do acknowledge potential shifts. They note that a significant weakening of the labor market or a marked decline in inflation could prompt the Fed to pivot earlier in the year. However, recent data paints a picture of robust economic health: the U.S. unemployment rate unexpectedly dropped to 4.4% in December, underscoring the labor market’s remarkable resilience.
This underlying economic strength has already compelled other major investment banks, including Goldman Sachs and Barclays, to recalibrate their own forecasts. They have pushed back their anticipated rate cut timelines from the earlier predictions of March and June to later in the year, specifically September and December, moving closer to JPMorgan’s ‘higher for longer’ perspective, albeit still anticipating cuts this year.
Disclaimer: This article is intended for market information purposes only. All content and views are for reference and do not constitute investment advice. It does not represent the opinions or positions of BlockTempo. Investors should make their own informed decisions and conduct their own due diligence. The author and BlockTempo will not be held responsible for any direct or indirect losses incurred by investors’ transactions.
