Benjamin Cowen says inflation rising to 3.8% is making it much harder for the Federal Reserve to cut interest rates, especially with energy prices driving inflation higher.
Key Points
Key Highlights:
- CPI inflation rose to 3.8%, above expectations, while core inflation also came in hotter than expected
- Cowen says the rise is mainly supply-driven due to higher energy prices and Middle East tensions
- Markets are now pricing out rate cuts for 2026 and even starting to price in possible rate hikes in 2027
- Bitcoin has held up relatively well, but altcoins continue bleeding against BTC as liquidity expectations weaken
- He argues crypto is more sensitive to monetary policy because altcoins rely heavily on speculation and loose liquidity
- The Fed is in a difficult position because inflation is rising while the labor market still looks stable
- If unemployment starts rising while inflation stays high, Cowen says the Fed could become “checkmated”
- He still sees strength in sectors like energy, metals, and some international markets during this late-cycle environment
Final Takeaway
Cowen believes rising inflation and energy prices are reducing the chances of rate cuts, which is negative for high-risk assets like altcoins. While markets remain strong for now, he warns that a mix of sticky inflation and future labor market weakness could create bigger macro problems later on.
