JPMorgan Revises Fed Rate Expectations for 2026, Bitcoin Experiences Downturn
In a surprising shift, financial titan JPMorgan Chase has updated its Federal Reserve rate expectations, no longer foreseeing any rate cuts in 2026. This adjustment comes in response to the latest U.S. employment data, influencing other major banks like Barclays, Goldman Sachs, and Morgan Stanley to delay their predictions on rate reductions.
JPMorgan Adjusts Fed Rate Outlook
JPMorgan Chase has adopted a more hawkish stance on U.S. monetary policy, now predicting a rate hike by the U.S. Federal Reserve in 2027. The bank previously anticipated a single 25 basis point cut in January 2026, but now foresees a complete rate pause throughout that year, exerting additional pressure on Bitcoin prices.
This revision follows weaker-than-expected U.S. jobs data, including JOLTS, Nonfarm payrolls, and the unemployment rate. JPMorgan had initially expected improvements in the labor market and an increase in capital expenditures alongside easing financial conditions.
Following recent jobs data, JP Morgan has revised its outlook and no longer anticipates any US Federal Reserve rate cuts in 2026, compared with its earlier prediction of a 25 basis point reduction in January.
— First Squawk (@FirstSquawk) January 12, 2026
Major Banks Postpone Rate Cut Projections
While JPMorgan has retracted its January rate cut outlook, other banks have postponed their predictions to mid-2026. According to the CME FedWatch Tool, traders now estimate a 95% probability that the Fed will maintain interest rates at the upcoming January meeting.
Goldman Sachs anticipates two 25bps cuts in June and September, revising earlier forecasts of March and June cuts. It projects the Fed funds rate to conclude 2026 at 3–3.25%, reducing recession chances from 30% to 20%.
Barclays has joined Morgan Stanley in deferring rate cut expectations to mid-2026, as recent declines in the unemployment rate and wage growth underscore a stable U.S. labor market.
Attention is now focused on Tuesday’s CPI inflation data and upcoming bank earnings. Higher-than-anticipated CPI figures could drive Bitcoin towards the CME gap near $88K. Tighter liquidity and ongoing redemptions from spot Bitcoin ETFs are heightening crypto market volatility concerns.
Bitcoin's price has retreated from earlier gains over the past 24 hours, currently trading at $90,435. The 24-hour low and high stand at $90,212 and $92,395, respectively, with trading volume surging by 150% in the same period.