Goldman Sachs revised its Federal Reserve rate cut timeline on March 12, shifting the expected first 25-basis-point cut from June to September 2026, with a second cut now penciled in for December. The earlier forecast had assumed a June start, but persistently high inflation and energy price spikes have derailed that plan.
Inflation projections were upgraded: headline PCE is now seen at 2.9% by end-2026, up 0.8 percentage points from prior estimates; core PCE is expected at 2.4%. GDP growth forecast was trimmed to 2.2%. Surging oil prices are the main driver. Brent crude is forecast to average around $98 per barrel in March and April, about 40% above the 2025 average. A month-long disruption in the Strait of Hormuz could push prices above $110 per barrel. Goldman estimates that every 10% rise in oil prices lifts headline inflation by roughly 0.2 percentage points.
Labor market data shows gradual softening. Goldman analysts noted that if employment conditions deteriorate faster than expected, an earlier rate cut remains possible. Yet traders assign only a 41% probability to a September cut, reflecting the prevailing view of a longer wait.
What Delayed Cuts Mean for Crypto
Cryptocurrencies tend to thrive during loose financial conditions and expanding liquidity. A later start to easing keeps borrowing costs elevated for longer, squeezing risk-sensitive assets like Bitcoin and Ethereum. Goldman has previously pointed out that digital assets often mirror the macro sensitivity of tech stocks. Stronger inflation expectations further dampen speculative appetite, leaving little room for a near-term crypto rally from liquidity channels.
Geopolitical Risk Adds to Macro Uncertainty
The ongoing U.S.-Iran standoff introduces a new macro risk factor. Goldman warned that oil supply shocks could stoke inflation and keep monetary policy tighter than markets anticipated. Short-term volatility in crypto markets could remain high if oil prices or inflation readings continue surprising to the upside. Looking further ahead, Goldman's base case expects Brent crude to ease to around $71 per barrel by late 2026, potentially relieving inflation pressure and reopening the door to faster monetary easing. For crypto investors, the key variables to watch in the coming months are inflation data, energy prices, and any Fed signals regarding the timing of rate cuts.