Fed Rate Cuts Expected in 2026 Amid New Chair Appointment
Kevin DuWall Street forecasts 2026 Fed rate cuts under a new Trump-appointed Chair, signaling a dovish shift favorable for crypto.
Wall Street is bracing for the Federal Reserve to continue cutting interest rates in 2026, with analysts now forecasting at least a 50 basis point reduction. The expectation comes as President Donald Trump prepares to name a successor to Fed Chair Jerome Powell, signaling a potential policy shift.
Morgan Stanley and Citigroup Update Forecasts
Leading financial institutions have revised their outlooks, anticipating a more aggressive easing cycle. According to recent client notes:
• Morgan Stanley now projects two 25-bps rate cuts in 2026, shifting its timeline from January and April to June and September.
• Citigroup has also adjusted its forecast, now expecting rate cuts in March, July, and September. This outlook implies a total reduction of up to 75 bps in 2026, which would push the federal funds rate range below 3%.
Why Wall Street Anticipates More Cuts
The market's dovish sentiment is building on the three rate cuts already anticipated for 2025. The primary driver is the expected appointment of a new Fed Chair by President Trump, which investors believe will lead to a more accommodative monetary policy.
This view is supported by officials like Treasury Secretary Scott Bessent, who has advocated for lower interest rates to stimulate economic growth, despite weaker-than-expected jobs data.
Figure 1: Market pricing for cumulative Fed rate cuts by December 2026 shows expectations firming around the 50-to-75 basis point range, reflecting growing anticipation of a dovish policy shift.
Potential Impact on Bitcoin and Crypto Markets
This macroeconomic environment is seen as highly favorable for digital assets. The expected rate cuts align with other expansionary policies, including the Federal Reserve's Quantitative Easing (QE) program that began in early December 2025 and a planned $200 billion injection into the housing industry by President Trump.
These dovish signals are prompting Wall Street investors to adopt a "risk-on" appetite. As the stock market continues its bull rally, a capital rotation away from precious metals and into riskier assets is expected. Consequently, Bitcoin and the wider altcoin industry appear poised to benefit, potentially triggering a strong bull run in 2026.
