Collins: Inflation to Persist, No Fed Rate Cuts to 2026

Published: 2026-05-13 16:16:52 |

Fed official Susan Collins said inflation will not fall this year and may only slow by 2027. She linked the outlook to ongoing US–Israel–Iran conflict, which has disrupted oil trade and pushed energy prices higher. In May 2026, US core inflation was reported at 2.9%, while near-term consumer inflation expectations rose to 3.4%. Crypto traders should note how this feeds into market pricing: “Fed rate cuts” odds for 2026 were repriced with higher “higher for longer” expectations. Prediction-market shares showed a drop in the likelihood of a June 2026 cut (YES at ~1.2%) and a higher probability of no cuts through 2026 (YES at ~70%). The article also flags Iran-war developments as a key driver of inflation expectations, making CPI releases and Fed Chair Jerome Powell’s messaging important near-term catalysts. Bottom line: Collins’s inflation warning strengthens the case for delaying “Fed rate cuts”, which typically pressures risk assets and can increase volatility across crypto markets.

Bearish

The core takeaway is that inflation is expected to persist and the market is pricing fewer (or no) Fed rate cuts through 2026. In past cycles, when “higher for longer” communication becomes more credible—especially alongside oil-price or supply-shock inflation—risk assets often see pressure. For crypto, that typically means tighter liquidity conditions, higher real yields, and a lower appetite for high-beta exposure. Short term, traders may react to the prediction-market repricing (lower odds for June 2026 cuts, higher odds of no cuts in 2026) by trimming leveraged positions, favoring defensive rotation, or increasing hedging around CPI/Powell headlines. Long term, if inflation expectations remain anchored by geopolitics (Iran-related oil disruptions), the probability of sustained restrictive policy can keep volatility elevated and slow medium-term upside follow-through. Net impact: a policy outlook skewed away from Fed rate cuts is generally bearish for crypto market stability.