Future Fed Moves: Rate Cuts Speculation Heats Up

Global brokerages predict the U.S. Federal Reserve will cut interest rates by 50 basis points in 2026, sticking to their forecast despite the Fed's recent signals suggesting otherwise. Disparities in expected timing are evident, with many suggesting March and June as potential months for rate reductions.

The forecast from leading global brokerages suggests that the U.S. Federal Reserve may reduce interest rates by a cumulative 50 basis points over two cuts in 2026. Despite recent indications from the central bank pointing against near-term cuts, this expectation remains unchanged.

On Wednesday, the Fed sanctioned a 25-basis-point cut amidst notable disagreements among officials. Though fresh projections show a median expectation for a singular quarter-percentage-point cut next year, prominent brokerages, diverging on the timeline, maintain their predictions. Strategists foresee the potential months for these reductions as March and June.

Economic indicators, such as November's employment and inflation reports, loom large in determining future policy decisions. Citigroup bets on a rate cut in January and March, whereas Morgan Stanley posits cuts in January and April. However, JP Morgan anticipates only one cut in January, while Standard Chartered shows no cuts through next year, highlighting diverse expectations within the financial community.

(With inputs from agencies.)