Sticky Inflation and Big Deficits Complicate the Outlook for Crypto

[nihalsari]

The International Monetary Fund’s latest assessment carries important implications for risk assets, including crypto. With inflation not expected to reach the Federal Reserve’s 2% target until 2027 and fiscal deficits remaining historically high, the probability of aggressive rate cuts in the near term appears limited. That’s a notable shift for markets that rallied through late 2025 on expectations of looser monetary policy.

Ironically, the IMF notes that historically large tax cuts and fiscal expansion under Donald Trump are key drivers of the very deficits that keep borrowing costs elevated. While the Fund does not predict an imminent sovereign crisis and says stress risks remain low, it describes a trajectory of rising debt and delayed disinflation — conditions that suggest any rate relief for markets, including crypto, may come slowly, if at all.

[ed]

crypto was supposed to be the hedge against this but now it’s just another risk asset waiting for the imf to stop being a buzzkill