Goldman Sachs has pulled the rate-cut forecast for 2026. The bank's economists revised their Federal Reserve outlook, eliminating all expected interest rate cuts for next year and pushing any possible easing deep into 2027.
The new forecast calls for two 25-basis-point reductions in June and December 2027, replacing the previous expectation of cuts in December 2026 and March 2027. Even that delayed timeline comes with a caveat: Goldman assigns only a 30% probability to those cuts actually happening.
The catalyst: May's employment figures came in stronger than anticipated, painting a picture of a labor market that refuses to cool. Multiple major brokerages have similarly pushed back or scrapped their 2026 easing expectations.
For risk assets, including crypto, prolonged elevated rates mean tighter liquidity. Capital that might flow into speculative assets faces competition from attractive risk-free yields. This shift from 'cuts starting December 2026' to 'maybe two cuts in 2027, with a 30% chance' represents a fundamental reassessment of how long rates will stay elevated.