JPMorgan predicts: The US interest rate cut will be delayed until 2027, with the Fed remaining on hold this year

The “rate cut feast” that cryptocurrency investors have been期待ing may be disappointed. JPMorgan recently issued a heavyweight forecast, breaking the market’s optimistic expectations about the timing of a US rate cut. It pointed out that the Federal Reserve (Fed) will keep interest rates unchanged at 3.5%-3.75% this year, and the next policy adjustment will not occur until Q3 2027, with a higher likelihood of a rate hike rather than a cut. This judgment starkly contrasts with mainstream expectations in the cryptocurrency market.

According to Reuters, JPMorgan believes the Fed will raise rates by 25 basis points (1 notch) in Q3 2027, which implies a significant revision of the US rate cut timeline. However, traders do not agree with this. The CME FedWatch tool shows that the market is actively betting on at least two rate cuts this year, each by 25 basis points.

Divergence in Rate Cut Timeline, Market Expectations Continue to Adjust

The crypto community is also inclined to accept the rate cut expectations. FXTM senior market analyst Lukman Otunuga stated, “Despite the challenges in 2025, with shrinking active supply and rate cut expectations, Bitcoin could see a strong rebound in 2026.” Such views believe that the decline in borrowing costs will reignite risk appetite in the economy and financial markets, providing bullish support for Bitcoin.

Many crypto analysts initially hoped that the new Fed Chair would bring a policy shift. The current Chair, Jerome Powell,’s term ended last May, and the market generally expects his successor to be more dovish than Powell. But JPMorgan’s forecast shatters this illusion and also reflects the Fed’s core decision-makers’ updated view on inflation and economic outlook.

Strong Employment Data Key, Fed Maintains Hawkish Stance

JPMorgan’s rate hike forecast is supported by solid economic data. Early this year, employment data showed the US unemployment rate unexpectedly dropped to 4.4%, well below market expectations, reflecting the labor market’s resilience. This strong economic fundamental has become an important basis for the Fed to continue maintaining high interest rates.

JPMorgan analysts also mentioned that if the labor market weakens or inflation drops significantly, the Fed might pivot later this year. But the reality is quite the opposite—robust labor markets and stable inflation expectations have reinforced the Fed’s hawkish stance, which is why US rate cuts have been repeatedly delayed.

Rising US Treasury Yields Challenge, Overvalued Assets Face Difficulties

JPMorgan’s rate hike forecast aligns with recent technical patterns in US Treasuries. The 10-year US Treasury yield (a key benchmark for global asset pricing) is currently around 4.18%, but technical indicators suggest this yield could challenge the 6% high within the next year. If this scenario materializes, it will put significant pressure on overvalued assets and risk assets like Bitcoin.

A sharp rise in yields means higher risk-free returns, making traditional bonds more attractive and reducing the demand for high-risk crypto assets. This also explains why the delay in US rate cuts has become an important factor suppressing crypto prices.

Investment Banks Adjust Forecasts, Rate Cut Timeline Continues to Shift

JPMorgan’s hawkish forecast is not an isolated case. Top investment banks like Goldman Sachs and Barclays have also revised their predictions, pushing the expected rate cut from earlier forecasts of March and June to September, December, or even later. This reflects a changing consensus on Wall Street regarding the timing of US rate cuts—an easing cycle is less urgent than previously anticipated.

Against this backdrop, the crypto market, which relies heavily on expectations of rate cuts, faces challenges from these revised macroeconomic realities. Investors’ previous optimism about US rate cuts is being corrected by macroeconomic developments, which may mark a period of adjustment that the entire crypto space needs to seriously face.