FACTBOX-Wall Street brokerages pencil Fed rate cuts in mid‑2026
Citigroup Inc. C | 115.25 | -0.04% |
Morgan Stanley MS | 165.81 | -0.22% |
Goldman Sachs Group, Inc. GS | 863.04 | +0.33% |
Updates with forecasts from Citigroup, UBS
Feb 12 (Reuters) - Major brokerages, including Goldman Sachs 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.
U.S. job growth unexpectedly accelerated in January and the unemployment rate fell to 4.3%, signs of labor market stability that could give the central bank room to keep interest rates unchanged for some time while policymakers monitor inflation.
Following the jobs report, Citigroup pushed back its expectation for the Fed's first rate cut of the year to April, having previously forecast in March.
The Fed will keep rates unchanged through Chair Jerome Powell's term ending in May, but could cut immediately afterward in June, a Reuters poll showed, with economists warning that policy under his likely successor, Kevin Warsh, could become too loose.
Traders are betting on a more than 94% 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 April, 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 |
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 |
Q4 |
- |