FACTBOX-Wall Street brokerages continue to expect two Fed rate cuts by end-2026
March 20 (Reuters) - Major brokerages are still forecasting two U.S. Federal Reserve interest-rate cuts in 2026 in contrast to the central bank's latest projections, which signaled a single quarter-point reduction amid renewed inflation concerns fueled by the Middle East war.
Morgan Stanley became the latest brokerage to revise its forecast for the central bank, joining peers such as Goldman Sachs and Barclays to expect the first rate reduction in September, compared with June previously.
Earlier this week, the Fed left rates unchanged at its March meeting , as expected. Investors focused on a cautious tone by Fed Chair Jerome Powell - that the economic outlook remains uncertain amid a U.S.-Israeli war with Iran.
Interest rate futures suggest traders see little chance of interest-rate cuts before mid-2027, according to the CME's 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 June, July and September) | 2.75%-3.00% |
Goldman Sachs | 50 bps | 2 (in September and December) | 3.00%-3.25% |
Morgan Stanley | 50 bps | 2 (in September and December) | 3.00%-3.25% |
BofA Global Research | 50 bps | 2 (in June and July) | 3.00%-3.25% |
Wells Fargo | 50 bps | 2 (in June and September) | 3.00-3.25% |
Nomura | 50 bps | 2 (in June and September) | 3.00-3.25% |
Barclays | 25 bps | 1 (in September) | 3.25%-3.50% |
UBS Global Research | 50 bps | 2 (July and October) | 3.00%-3.25% |
UBS Global Wealth Management | 50 bps | 2 (June and September) | 3.00%-3.25% |
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 (in H1 2027) | - | - |
