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 No. of cuts in Fed Funds
2026 2026 Rate
Citigroup 75 bps 3 (in April, 2.75-3.00%
July and
September)
Goldman Sachs 50 bps 2 (in June and 3.00-3.25%
September)
Morgan Stanley 50 bps 2 (in June and 3.00-3.25%
September)
BofA Global 50 bps 2 (in June and 3.00-3.25%
Research July)
Wells Fargo 50 bps 2 (in March and 3.00-3.25%
June)
Nomura 50 bps 2 (in June and 3.00-3.25%
September)
Barclays 50 bps 2 (in June and 3.00-3.25%
December)
UBS Global Research 50 bps 2 (July and 3.00-3.25%
October)
UBS 2 (June and
Global Wealth 50 bps September) 3.00-3.25%
Management
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 Arun Koyyur)
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