Wall Street Prices in More Fed Rate Cuts for 2026
Markets are increasingly trading the idea that US monetary policy will stay accommodative well into 2026. Rather than debating whether rates will fall again, the discussion on Wall Street has shifted to how far and how fast the easing cycle could go - especially as political pressure on the Federal Reserve intensifies.
Major banks are now converging on a more dovish outlook for next year. Strategists at Morgan Stanley and Citigroup have both revised their projections to reflect additional rate cuts in 2026, following the easing steps already taken in 2025.
Key takeaways
- Major banks now expect at least two Fed rate cuts in 2026
- Political pressure and leadership changes are reinforcing dovish expectations
- A looser liquidity environment could favor Bitcoin and crypto markets
Morgan Stanley no longer expects early-year cuts, instead placing two 25-basis-point moves in the middle and later part of 2026. Citigroup’s forecast goes further, outlining a path that could see up to three reductions over the year, amounting to as much as 75 basis points in total and potentially pushing policy rates below the 3% level.
Politics adds weight to market expectations
The growing confidence around further easing is not coming from economic data alone. President Donald Trump is expected to soon name a successor to current Fed chair Jerome Powell, whose term expires in May. Investors are increasingly assuming that the next chair will be more receptive to lower rates and growth-focused policy.
That assumption has been reinforced by repeated public comments from senior officials. Treasury Secretary Scott Bessent has openly argued that cheaper borrowing costs are necessary to support expansion, signaling alignment between fiscal leadership and a more accommodative monetary stance.
Liquidity is already flowing again
Beyond rate expectations, the broader liquidity backdrop has also shifted. The Federal Reserve restarted quantitative easing toward the end of 2025, reversing earlier balance-sheet tightening. At the same time, the administration is expected to inject significant capital into the economy, including funding tied to housing and related sectors.
For markets, the combination of rate cuts and fresh liquidity is a powerful signal. Financial conditions are loosening, and investors are responding accordingly by rotating back into risk assets.
Why crypto markets are paying attention
This macro setup has not gone unnoticed in the digital asset space. Historically, periods of falling rates and expanding liquidity have coincided with strong performance in crypto markets, as capital seeks alternatives to low-yielding traditional instruments.
Analysts argue that the current environment checks many of the same boxes. A weaker dollar outlook, rising risk appetite, and expectations of sustained easing all tend to support assets like Bitcoin and the broader altcoin market.
With precious metals already showing signs of fatigue after a strong run, some investors expect capital to rotate toward equities and crypto as the next leg of the cycle unfolds.
A familiar macro playbook returns
While forecasts can change quickly, Wall Street’s message is becoming clearer. Rate cuts in 2026 are no longer seen as a tail risk, but as a base case. The only real debate now centers on the magnitude of easing and its timing.
If political pressure, softening growth signals, and liquidity injections persist, the coming year could resemble previous periods where accommodative policy fueled extended rallies across risk assets – with crypto once again positioned as a major beneficiary.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Krasimir Rusev is a journalist with many years of experience in covering cryptocurrencies and financial markets. He specializes in analysis, news, and forecasts for digital assets, providing readers with in-depth and reliable information on the latest market trends. His expertise and professionalism make him a valuable source of information for investors, traders, and anyone who follows the dynamics of the crypto world.
