🚨 UBS LAUNCHES A COLD WATER JAR INTO THE CRYPTO MARKET
The #Fed postpones the rate cut until September due to persistent inflation
The banking giant #UBS has drastically revised its projections and now expects that the Federal Reserve of the United States (Fed) will delay the start of interest rate cuts until September 2026. Additionally, they only project a second cut for December of this year.
Why isn’t the Fed lowering rates now? According to UBS economist Andrew Dubinsky, the Fed needs "clear evidence" that inflation is cooling, which is not happening at the desired pace.
Persistent Inflation: The core PCE index (the Fed's favorite) remains stagnant around 3%, partly driven by tariffs.
Geopolitical Risks: Rising oil prices due to tensions with Iran are pushing inflation higher.
Strong Labor Market: Employment stability gives the Fed room to maintain a cautious stance without rushing to reactivate the economy.
Why is this vital for the Crypto market?
"Pain Trade" for Risk Assets: Historically, #bitcoin and the crypto market thrive in "cheap money" environments (low interest rates). The delay in cuts means that the cost of capital will remain high for longer, reducing the liquidity available to invest in risk assets.
Strong Dollar, Weak Crypto: High rates keep the US dollar strong, which often creates selling pressure on dollar-denominated assets like Bitcoin #BTC / USD.
Medium-Term Outlook: Although UBS expects conditions to improve by 2026, they warn that the exact timing of cuts remains uncertain. This introduces volatility and uncertainty into the market in the short and medium term, forcing crypto investors to readjust their "wait" strategies.
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