Goldman Sachs, Barclays and Morgan Stanley now expect the U.S. Federal Reserve to deliver its next interest rate cut in June after data showed the jobs market was not rapidly deteriorating, while J.P.Morgan sees the next move as a hike in 2027.
Data on Friday showed U.S. employment growth slowed more than expected in December. However, a decline in the unemployment rate to 4.4 per cent and solid wage growth boosted expectations that the central bank will leave interest rates unchanged at its January meeting.
Separately, an inflation reading on Tuesday came in-line with expectations, leaving market expectations for Fed rate cuts this year largely unchanged.
Traders are betting on a 97.2 per cent chance for the Fed to keep rates unchanged at its Jan. 27 to 28 meeting, according to the CME FedWatch tool.
Here are the forecasts from major brokerages for 2026:
| Brokerage | Total cuts in 2026 | No. of cuts in 2026 | Fed Funds Rate |
|---|---|---|---|
| Citigroup | 75 bps | 3 (in March, July and September) | 2.75-3.00% |
| Goldman Sachs | 50 bps | 2 (in June and September) | 3.00-3.25% |
| Morgan Stanley | 50 bps | 2 (in June and September) | 3.00-3.25% |
| BofA Global Research | 50 bps | 2 (in June and July) | 3.00-3.25% |
| Wells Fargo | 50 bps | 2 (in March and June) | 3.00-3.25% |
| Nomura | 50 bps | 2 (in June and September) | 3.00-3.25% |
| Barclays | 50 bps | 2 (in June and December) | 3.00-3.25% |
| UBS Global Research | 50 bps | 2 (July and October) | 3.00-3.25% |
| HSBC | No rate cuts | - | 3.50-3.75% |
| J.P. Morgan | No rate cuts | - | 3.50-3.75% |
| Macquarie | Rate hike | in Q4 | - |
| UBS Global Wealth Management | 25 bps | in Q1 | - |
| Standard Chartered | No rate cuts | - | 3.50-3.75% |
| Deutsche Bank | 25 bps | 1 (in September) | 3.25-3.50% |
(Compiled by the Broker Research team in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Devika Syamnath)
