Fed Policy: Two Rate Cuts Locked In, 2026 Remains Ambiguous

Fed Policy: Two Rate Cuts Locked In, 2026 Remains Ambiguous
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By NFTPlazas
Key Takeaways
Analysts expect two 25 bps Fed cuts this year, finalized by the October 29 meeting, moving rates to 3.75% – 4.00%.
The 2026 interest rate path remains highly ambiguous, reflecting structural economic uncertainty for policymakers.
Expected Fed easing boosts risk assets; lower rates and a weaker dollar provide a structural lift for crypto.
Crypto faces a conflict: high leverage risk causing sharp liquidations clashes with strong institutional conviction buying.
A recent Reuters survey shows the Federal Reserve outlook has decisively pivoted. Analysts now widely expect two 25 basis point (bps) rate cuts this year, doubling previous expectations.
They strongly anticipate the initial 25 bps reduction at the October 29 FOMC meeting, which should set the Fed Funds Rate target range at 3.75% to 4.00% by year-end. 115 of 117 economists agree on this first move, though two foresee a more aggressive 50 bps cut in December.
The derivatives market shows greater near-term certainty than the economist poll. In fact, rate futures indicate that financial market traders have fully priced in both anticipated rate cuts, showing strong institutional confidence in the dual-cut path for the rest of 2025.
However, this strong market signal contrasts with a slight moderation in conviction among economists regarding the final action. For instance, only 71% of surveyed economists support the second reduction scheduled for December. Consequently, this minor divergence highlights Chairman Powell’s stress on data dependency: the timing of that second move will depend more critically on intervening economic reports than on the highly probable October adjustment.
While the immediate easing cycle appears settled, the medium-term outlook extending into 2026 lacks clear consensus, according to the poll data. The survey reveals significant disagreement regarding the interest rate trajectory for the subsequent year, confirming that the terminal rate for this easing cycle remains an unresolved structural question for both policymakers and financial analysts.
This polarization within the economic community stems from fundamental debates over long-term forces, including potential productivity shifts and the true level of the natural rate of interest (r*). Because the longer horizon currently lacks a clear economic anchor, the path beyond the year-end target range of 3.75% to 4.00% is highly uncertain.
Consequently, the Federal Reserve will be compelled to rely on a strict, meeting-by-meeting methodology, creating a market dynamic of near-term clarity built upon persistent long-term ambiguity.

The Federal Reserve’s pivot to an easing cycle offers a key structural lift for risk assets. Expected rate cuts increase financial system liquidity, encouraging capital to flow from low-yield instruments into assets offering greater returns, directly benefiting digital currencies like Bitcoin and Ethereum. Lower rates typically weaken the U.S. dollar, providing additional support for dollar-denominated crypto holdings.
However, the crypto market remains vulnerable to volatility. The recent early October $19 billion liquidation event across Bitcoin and Ethereum starkly demonstrated how swiftly fear and forced selling can happen through ecosystems dependent on high leverage.
Learn more: BTC $112K vs. ETH $4200: Which Short Squeeze Hits First?
In contrast, corporate treasuries now possess over 1 million BTC, representing a significant portion of the available supply, with the number of corporate owners increasing significantly since mid-2025. This consistent buying acts as a firming base, suggesting that while the market can endure severe corrections driven by over-leveraging, the fundamental conviction in the asset’s future worth endures.
Signs of market advancement are also evident in how capital is moving. A leveling off in Bitcoin futures volume is occurring alongside a sharp rise in Ethereum futures volume. This contrast suggests that experienced market participants are actively seeking higher-reward hedging strategies within the broader crypto environment as the more relaxed monetary conditions take effect.
Learn more: SharpLink’s ETH Treasury Surpasses $900M in Unrealized Gains
Disclaimer
NFTPlazas provides trusted news and insights on Web3. The views expressed on this site do not constitute investment advice. Before making any high-risk investments in cryptocurrency or digital assets, please conduct your own thorough research. All transfers and transactions are carried out at your own risk, and any resulting losses are solely your responsibility. NFTPlazas does not endorse the buying or selling of cryptocurrencies or digital assets and is not a licensed investment advisor. Please also note that NFTPlazas may participate in affiliate marketing programs.
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