FACTBOX-Top brokerages sharply split on Fed's 2026 policy outlook
Morgan Stanley MS | 0.00 |
Updates with Morgan Stanley's forecast change; adds Societe Generale's forecast
May 1(Reuters) - Global brokerages have steadily pulled back from early-year expectations of two U.S. interest rate cuts, with forecasts sharply split between some easing and no cuts at all in 2026, fueled by elevated inflation risks and cautious policymakers.
The Fed held its policy rates at its April meeting, in a sharply divided decision, the most split since 1992, as inflation concerns deepen.
Morgan Stanley became the latest brokerage to bet on no easing this year, dropping its earlier forecast of two rate cuts.
Traders are pricing in 83.8% probability that the Fed will hold rates through the end of 2026, according to 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 September, October and December) |
2.75%-3.00% |
Goldman Sachs |
50 bps |
2 (in September and December) |
3.00%-3.25% |
BofA Global Research |
50 bps |
2 (in September and October) |
3.00%-3.25% |
Wells Fargo |
50 bps |
2 (in June and September) |
3.00-3.25% |
UBS Global Wealth Management |
50 bps |
2 (September and December) |
3.00%-3.25% |
Nomura |
50 bps |
2 (September and December) |
3.00-3.25% |
Barclays |
25 bps |
1 (in September) |
3.25%-3.50% |
UBS Global Research |
25 bps |
1 (in December) |
3.25%-3.50% |
Morgan Stanley |
No rate cuts |
- |
3.50%-3.75% |
Deutsche Bank |
No rate cuts |
- |
3.50%-3.75% |
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% |
Wells Fargo Investment Institute |
No rate cuts |
- |
3.50%-3.75% |
Standard Chartered |
No rate cuts |
- |
3.50%-3.75% |
Societe Generale |
No rate cuts |
- |
3.50%-3.75% |
Macquarie |
Rate hike (in H1 2027) |
- |
- |