Fed Cuts 2025 Rates to 3.5–3.75%, 2026 Path Split as Powell to Step Down in May and Dovish Chair Bets Tilt Crypto Market Outlook

The Federal Reserve has trimmed rates three times in 2025, pushing the policy corridor to 3.5%–3.75% while policy remains at an 18‑year high. The latest dot plot reveals deep splits on the 2026 rate path, with officials divided about zero, one, or two rate cuts.

Market data from the CME shows a rate cut probability of roughly 20% in January, rising to around 45% by March, signaling a data‑driven stance. Most forecasts point to a modest easing in 2026 or a cautious approach, subject to inflation and employment dynamics.

As the 2026 outlook takes shape, the policy path remains data‑driven. If inflation stays contained and labor demand softens, traders expect 1–2 rate cuts, which could lift risk assets and the crypto market. Conversely, a renewed inflation pulse may tighten liquidity and pressure stocks and tokens.