Major brokerages including Goldman Sachs, Barclays and Morgan Stanley expect the U.S. Federal Reserve to deliver its next interest rate cut in June while J.P. Morgan sees the next move as a hike in 2027.
With the federal government reopening after a partial shutdown that delayed key economic releases, the U.S. Bureau of Labor Statistics said on Wednesday that January’s jobs report will be released next week.
Last month, the Fed’s rate-setting committee left interest rates unchanged at 3.5 per cent to 3.75 per cent as expected. Chair Jerome Powell said the Fed would be data-dependent, and the upside risks to inflation and downside risks to employment had diminished.
Traders are betting on an over 80 per cent chance for the Fed to keep rates unchanged at its March policy 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% |
| UBS Global Wealth Management | 25 bps | in Q1 | - |
| Deutsche Bank | 25 bps | 1 (in September) | 3.25-3.50% |
| BNP Paribas | No rate cuts | - | 3.50-3.75% |
| HSBC | No rate cuts | - | 3.50-3.75% |
| J.P.Morgan | No rate cuts | - | 3.50-3.75% |
| Standard Chartered | No rate cuts | - | 3.50-3.75% |
| Macquarie | Rate hike | Q4 | - |
(Compiled by the Broker Research team in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Devika Syamnath)
