Barclays Predicts Federal Reserve Interest Rate Cuts

These projections indicate significant potential shifts in economic policy that could affect global markets and crypto assets. Following Powell’s comments, Barclays aligns with major banks on the expected trajectory of US interest rates.

Barclays projects that the Federal Reserve will implement five rate cuts, influenced by Powell’s remarks on labor market stress. Recent non-farm payroll data further supports this forecast. Jonathan Millar, Lead Economist at Barclays, noted,

“We expect the US Federal Reserve to cut interest rates three times in 2025 and twice in 2026, each by 25 basis points, following the recent signals from Jerome Powell regarding labor market stress.”

This aligns with Barclays’ broader economic outlook and forecasts from other major financial institutions.

The economics team at Barclays, led by Jonathan Millar, expects these adjustments, impacting institutional trading strategies and economic forecasts. This shift reflects Powell’s messages from the Jackson Hole symposium.

The forecast may trigger a positive response in cryptocurrency markets, including BTC and ETH. Anticipation of rate cuts has sparked increased activity in derivative markets, highlighting speculative positioning. Historically, Fed easing boosts crypto valuations, with asset prices benefiting during past cycles. Institutional reactions, such as positioning in the CME, also indicate expectant market behavior.

Barclays’ forecast may alter investment strategies, with changes anticipated across financial markets. The potential implies shifts in liquidity and asset allocations, indicative of broader socioeconomic trends. This scenario could lead to greater crypto adoption and financial shifts. As interest rates adjust, DeFi protocols might gain traction, aligning with trends observed in previous Fed easing periods.