Goldman Sachs Research, a division of the leading investment bank that specializes in data-driven insights and analysis on economies and markets, has predicted three additional interest rate cuts by the US Federal Reserve. According to the Research firm, the Fed will implement one interest rate cut in December and two more in 2026.
Related: Trump Pressures Fed Chair Powell Over Costly Renovation and Interest Rates
According to David Mericle, chief US economist and member of the Goldman Sachs Research team, the latest forecast is consistent with the bank’s original forecast about the Fed’s actions, despite Jerome Powell’s latest press conference playing out differently from their expectations. Mericle noted that Powell was more hawkish than most people expected during last week’s event.
The Fed Targets a Terminal Rate of 3 -3.25% by June 2026
In the meantime, Goldman Sachs predicts that after December, the Fed will cut interest rates in March and June 2026 to a terminal rate of 3 – 3.25%. Concerning Powell’s tone during the press conference, Mericle noted that the Fed Chair may be facing substantial opposition from the FOMC regarding the risk management cuts, which could have led him to voice those concerns during his speech.
From a cryptocurrency market perspective, analysts consider a potential interest rate cut by the Fed as a bullish signal that could boost digital asset prices. The main logic behind this is the increased liquidity associated with interest rate cuts. Typically, lower interest rates increase liquidity in financial markets, providing more capital for riskier investments, including cryptocurrencies.
Investors Move to Crypto for Higher Rewards
Additionally, lowering the interest rate reduces the potential yields from government bonds and returns from traditional stocks, leading investors seeking higher rewards to turn to cryptocurrencies or other instruments with higher potential returns. It is also worth noting that reduced rates can weaken the US dollar, making Bitcoin and cryptocurrency more attractive as a store of value.
Related: BULLISH: Tariff Effect as Countries Start Cutting Interest Rates
Bitcoin experienced a notable pullback after reaching a new all-time high of $126,272 in the first week of October, according to data from TradinView. Analysts expect the upward movement to continue, alongside a surge in the altcoin market, with liquidity inflows resulting from potential rate cuts supporting the bullish narrative.
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