Moody’s Mark Zandi: Fed to Make Slow, Incremental Rate Cuts in 2026 as CPI Stays Above Target
Moody’s chief economist Mark Zandi said the Federal Reserve is likely to implement several slow, incremental rate cuts in 2026 rather than an aggressive easing cycle. The outlook reflects a fragile U.S. economy and inflation that remains above the Fed’s 2% target — November 2025 CPI rose 2.7% year‑over‑year and core CPI was 2.6%. Zandi warned inflation risks are two‑sided, complicating the Fed’s decision-making and requiring disciplined policy signalling. For crypto markets, the anticipated gradual easing matters because rate cuts affect liquidity, risk appetite, leverage conditions and cross‑asset correlations; traders should monitor shifting monetary signals as they reassess demand drivers for Bitcoin and other digital assets.
Neutral
Zandi’s forecast of gradual, incremental rate cuts is neither strongly stimulative nor immediately contractionary for crypto. Slow cuts typically increase liquidity and can raise risk appetite over time, which is supportive for risk assets including cryptocurrencies. However, because inflation remains above target and the Fed is expected to act cautiously, any easing is likely to be modest and drawn out — limiting a decisive bullish impulse. Historical parallels: past cycles of gradual easing (e.g., parts of 2019) supported risk assets but did not produce the rapid, sustained rallies seen after large, aggressive easing (e.g., 2020 pandemic cuts). Short-term impact: increased sensitivity to macro data and Fed commentary; heightened volatility around CPI releases and Fed signals. Traders should watch real-time inflation prints, Fed communications, and liquidity indicators (funding rates, stablecoin flows, margin levels). Long-term impact: a prolonged, mild easing cycle can be constructive for crypto adoption and risk-on positioning but may produce a series of stop-start rallies rather than a persistent bull market until clear, sustained disinflation and stronger rate cuts occur.