"Will US interest rates rise or fall?" JPMorgan takes the opposite stance, challenging the market consensus on rate cuts.

The cryptocurrency market has been eagerly awaiting the arrival of rate cuts, but JPMorgan Chase has poured cold water on that hope. The world’s top investment bank predicts that the Federal Reserve (Fed) will not only hold steady this year but may also choose to raise interest rates in Q3 2027, completely overturning the market’s mainstream expectation of rate cuts. The direction of US interest rates is becoming a key variable influencing the entire financial market.

JPMorgan’s Hardcore Prediction: US Interest Rates Unchanged in the Short Term

According to Reuters, JPMorgan Chase states that the Fed will keep US interest rates within the 3.5% to 3.75% range throughout 2025 without any adjustments. Even more surprisingly, they forecast that the next policy move might not occur until Q3 2027, and at that time, the likely decision would be a 1 basis point hike (25 basis points), rather than the market’s expected rate cut.

This forecast precisely bursts the recent crypto community’s “rate cut bullish” dream. Many traders and crypto analysts initially believed that rate cuts would lower borrowing costs and rekindle risk appetite in the economy and financial markets, benefiting high-risk assets like Bitcoin.

Traders vs. Wall Street: Who Has a More Accurate Judgment on US Interest Rates?

The CME FedWatch Tool presents a different picture. Traders are heavily betting that the Fed will cut rates at least twice this year, each by 1 basis point. FXTM senior market analyst Lukman Otunuga also said, “Despite challenges in 2025, with shrinking active supply and rate cut expectations, Bitcoin could rebound strongly in 2026.”

This optimistic sentiment sharply contrasts with JPMorgan’s pessimistic forecast. Who should investors believe regarding US interest rate predictions? This has become a headache for investors.

US Treasury Yield Hints: US Interest Rates May Continue to Rise

More concerning is the technical pattern of the 10-year US Treasury yield, which is signaling danger. This key benchmark for global asset pricing shows the possibility of challenging the 6% high within the next year (current around 4.18%). If this scenario materializes, not only will US interest rates face upward pressure, but overvalued assets and risky investments could also suffer significant shocks, which is undoubtedly bearish for the crypto market.

Investment banks like Goldman Sachs and Barclays have already begun adjusting their outlooks. They have delayed their expected rate cut timelines from March and June to September and December. Although this shift is less extreme than JPMorgan’s, it reflects Wall Street’s reassessment of the future trajectory of US interest rates.

Strong Labor Market Resilience Makes US Rate Adjustments Difficult

JPMorgan analysts emphasize that unless there is a clear slowdown in the labor market or a significant decline in inflation, the Fed is unlikely to pivot in the short term. The latest data seem to contradict this optimistic assumption — December’s employment figures showed the US unemployment rate unexpectedly falling to 4.4%, with the labor market still demonstrating strong resilience.

This solid economic fundamental supports the Fed’s high interest rate policy. As long as the employment market remains robust and inflation shows no clear signs of retreat, the US interest rates will be unlikely to enter the anticipated downward cycle.

Can the New Chair Change the US Interest Rate Trajectory?

It’s worth noting that Jerome Powell’s term as Fed Chair will end in May 2025. The market generally expects the successor to be more dovish, potentially adopting a more moderate stance on US interest rates. However, JPMorgan’s forecast suggests that even if policymakers change, the overall trajectory of US interest rates will be difficult to reverse.

Currently, the crypto market’s rate cut dreams remain distant. Investors can only wait patiently and closely monitor the subsequent developments in US interest rates and the labor market.