US economists cut recession odds to 25% while raising inflation expectations, according to a Wall Street Journal survey, leaving little room for the Federal Reserve to cut interest rates this year.
This shift is important for crypto markets. A higher Fed for a longer period removes the catalyst that risk assets relied on to achieve a recovery in the second half.
Survey points to steady inflation and a dovish Fed
The July survey of 72 economists was conducted July 2-7. They succeeded in reducing the recession Odds 25% From 33%, the lowest reading since early 2025.
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Views on the labor market also improved, with unemployment in December expected to reach 4.3%. Furthermore, forecasters now expect the economy to grow 2.1% this year, up from 2% in April.
However, inflation tells a different story. Economists Consumer price forecasting To rise by 3.4% through December, above the April estimate of 3.2%. The core personal consumption expenditures rate, a measure the Fed closely monitors, is expected to reach 3.2%.
“We’re learning that there’s more momentum in the economy: It keeps growing at 2% no matter what you aim at, and inflation remains high,” said Robert Frey, an independent economic consultant in Delaware.
Why price forecasts affect Bitcoin
Interest rates shape how investors deal with risk. Lower interest rates lower returns on cash and bonds, pushing money into stocks and cryptocurrencies. Higher rates for a longer period do the opposite.
When safe assets pay more, capital exits volatile holdings first. Bitcoin (BTC) is often present Near the front of that queue. So a late cut removes key support.
Traders are becoming more aggressive this week. CME FedWatch shows a 34.2% chance of a rate hike at the July meeting, up from 18.2% a week ago. Renewed hostilities between the United States and Iran have fueled these bets.
The minutes of the Fed’s June meeting reinforced this division. Officials voted unanimously to uphold the decision, but were divided on the next course of action. Nine out of 18 policymakers predicted One rise before the end of 2026.
Many of the reported risks are related to inflation Spending on artificial intelligence (AI). The next meeting of the Federal Open Market Committee (FOMC) is scheduled for July 28-29.
Given persistent inflation, a rate cut seems unlikely. Cooler data should now revive risk appetite.
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this post Economists see recession risks reduced: Will the Fed keep raising interest rates? appeared first on BeInCrypto.
