Williams signals a key message: the interest rate cut cycle may be nearing its end, and the crypto market faces a new test

Federal Reserve New York President Williams delivered a speech today, stating that the economic outlook for 2026 is “quite favorable,” while also pointing out that monetary policy is now closer to a neutral stance. This seemingly optimistic statement may be a double-edged sword for the crypto market: a strong economy could mean the Fed is not in a rush to continue easing policy, and the rate cut cycle may be nearing its end.

The True Meaning Behind Williams’ Remarks

As a permanent FOMC voter and New York Fed President, Williams’ comments typically represent the Fed’s policy direction. Two key points he raised warrant in-depth understanding:

Economic outlook “quite favorable”

This indicates the Fed’s confidence in economic recovery. According to relevant information, while U.S. employment data has been revised (a downward adjustment of 910,000 jobs), the overall economy remains resilient. When economic conditions improve, central banks usually slow down rate cuts or even halt them.

Monetary policy “close to neutral”

This is a more critical signal. After the last 25 basis point rate cut, interest rates are at 3.5%-3.75%. According to the dot plot projections, the Fed plans only one rate cut by 2026, which suggests the rate cut cycle may truly be ending.

Turning Point of the Rate Cut Cycle

By 2025, the Fed will have cut rates by a total of 75 basis points in this easing cycle, which has been quite substantial. Williams’ remarks imply:

• Rate cuts will not accelerate significantly anymore
• In 2026, policy focus may shift from rate cuts to observation
• Future policy will depend more on economic data

What does this mean for the crypto market? The era of liquidity easing may gradually come to an end.

New Situation Facing the Crypto Market

Positive Factors

• The issue of Fed independence has come to the forefront (according to information, Trump-appointed director Milani advocates for more aggressive rate cuts but was rejected), which actually strengthens market confidence in policy predictability
• Greater transparency in policy means market volatility may become more predictable
• The optimistic economic outlook itself supports risk assets

Potential Risks

• The end of the rate cut cycle means reduced liquidity support
• A prolonged high-interest-rate environment could persist, negatively impacting the attractiveness of crypto assets
• Next Tuesday (tomorrow), the U.S. December CPI data will be released; if inflation remains high, it could further reinforce the Fed’s “pause on rate cuts” stance

Key Risks Next Week

According to information forecasts, Fed officials will speak intensively next week, including key figures like Williams and Kashkari. These speeches may further confirm the policy tone. Especially with the December CPI data, if the figures are worse than expected (persistent inflation), it could trigger sharp market adjustments.

Summary

Williams’ remarks mark a shift for the Fed from “aggressive rate cuts” to “waiting and watching.” For the crypto market, this is neither purely negative nor positive but an important turning point signal. The era of easing benefits is gradually fading, and the market needs to adapt to a “high interest rate + economic resilience” environment. Next week’s CPI data and officials’ speeches will further confirm this trend. Paying attention to Williams’ speech today and upcoming economic data is key to grasping market direction.