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Brokerages stick with US rate cut forecasts despite Fed caution
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Brokerages stick with US rate cut forecasts despite Fed caution
Mar 10, 2026 10:08 PM

By Siddarth S

Dec 11 (Reuters) - Most global brokerages predict the U.S. Federal Reserve will reduce interest rates by a cumulative 50 basis points over two cuts in 2026, reiterating their earlier position even as the central bank indicated that near-term cuts were unlikely.

The Fed on Wednesday delivered a 25-bp cut amid sharp divisions and dissents among central bank officials. New policymaker projections showed a median expectation for a single quarter-percentage-point cut next year, which remained unchanged from September's outlook.

In contrast, most brokerages reiterated their expectations, even as they differed on the timeline.

March and June policy meetings have emerged as the likely months for the central bank to cut rates among strategists from Goldman Sachs, Wells Fargo and Barclays.

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data," the rate-setting Federal Open Market Committee said in a policy statement.

Fed Chair Jerome Powell repeatedly referenced being in a strong position to wait on the next move during the press conference.

Both Barclays and Goldman viewed the policy statement as 'hawkish signals' to balance the 25-bp cut.

Citigroup expects the next cut in January and March, betting on weak labour market data, while Morgan Stanley predicts cuts in January and April.

The November jobs and inflation report due next week acts as a crucial catalyst for January's policy meeting.

J.P. Morgan expects Fed to cut just one more time in January, while Standard Chartered maintained its stance of no cuts through next year.

"Overall, we see his (Powell's) comments as having generated broad-based risk optimism rather than major changes in the expected policy path," StanChart said.

Traders are expecting about 54 bps of cuts by end of 2026, as per data compiled by LSEG.

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