Updates with Citigroup, BofA and Wells Fargo Investment Institute's Fed forecasts
April 7 (Reuters) - Major brokerages are persisting with forecasts for two interest-rate cuts by the U.S. Federal Reserve 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 conflict in Middle East.
Goldman Sachs, BofA Global Research and Barclays expect the first rate reduction in September, compared with June previously.
The Fed left rates unchanged at its meeting in March, as expected. Investors focused on a cautious tone by Chair Jerome Powell - that the economic outlook remains uncertain amid the Iran war.
Money market participants are no longer pricing in any easing from the U.S. central bank this year, according to the CME Group's FedWatch Tool, compared to two rate cuts before the conflict erupted.
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% |
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% |
Nomura | 50 bps | 2 (September and December) | 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 (September and December) | 3.00%-3.25% |
Deutsche Bank | 25 bps | 1 (in September) | 3.25%-3.50% |
No rate cuts | - | 3.50%-3.75% | |
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% |
Rate hike (in H1 2027) | - | - |
(Compiled by the Broker Research team in Bengaluru; Editing by Sriraj Kalluvila)
((JoelJose@thomsonreuters.com;))
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