Goldman Sachs has delayed its forecast for the first rate cut by the Federal Reserve until September 2026, which is likely to put pressure on the crypto market.
Conclusion
- Goldman Sachs now expects the first Fed rate cut in September 2026, later than its previous June forecast.
- Inflation forecasts have been raised, with headline PCE expected to reach 2.9% by the end of 2026.
- Higher long-term rates can put pressure on the crypto market, as tighter liquidity often weighs on risk assets like Bitcoin.
Goldman Sachs delayed its forecast of when it might start cutting interest rates, warning that rising inflation risks linked to oil prices and geopolitical tensions could delay monetary easing.
In a note published on March 12, the investment bank said it now expects the first rate cut of 25 basis points in September 2026, followed by another cut in December. Previous forecasts put the first time in June.
The revised outlook comes as financial markets remain unsettled by the economic impact of the ongoing conflict between the US and Iran, which has fueled fears of supply disruptions in global oil markets.
Inflation forecasts are rising
Goldman also raised inflation expectations for 2026. The bank now sees PCE inflation reaching 2.9% by the end of the year, an upward revision of 0.8 percentage points. Core PCE inflation is expected to rise to 2.4%, while the forecast for US GDP growth is down to 2.2%.
The increase in energy prices is the main factor behind this shift. The bank now expects Brent crude to average around $98 a barrel in March and April, about 40% higher than the 2025 average. In a scenario where disruptions in the Strait of Hormuz continue for a month, prices may rise above $110 per barrel.
Goldman estimates that a 10% increase in oil prices could raise inflation by about 0.2 percentage points.
At the same time, the company pointed to signs of gradual softening of the labor market. Analysts say an early rate cut could happen if employment conditions weaken sooner than expected.
Traders are currently assigning a 41% chance of a rate cut in September.
What Lowering Latency Means for Crypto
Changes in interest rate expectations are often propagated through the digital asset sector. Cryptocurrencies such as Bitcoin and Ethereum do best when financial conditions ease and liquidity expands.
A late start to the easing period suggests that borrowing costs may remain higher for a long time. This environment is typically weighted toward risk-sensitive assets, including the broader crypto market.
Strong inflation expectations may also reduce investor appetite for speculative investments. In past periods, digital assets have often reacted to macroeconomic news in similar ways to tech stocks.
Goldman also pointed to geopolitical risks as a growing macro factor. Oil supply shocks, the bank said, could feed inflation and keep monetary policy tighter than markets previously expected.
Macro risks remain in focus
Short-term volatility could remain high if inflation readings or energy prices surprise upwards. Rising oil prices tend to filter through to consumer prices over time, which can complicate the Fed’s policy path.
However, the long-term outlook is less clear. Goldman’s main case still expects oil prices to fall to around $71 a barrel by the end of 2026, which could ease inflationary pressures and open the door to monetary easing.
For the crypto market, key variables to watch in the coming months will likely include inflation data, energy prices, and signals from the Federal Reserve on the timing of rate cuts.
