Updates with UBS GWM's forecast
March 26 (Reuters) - Major brokerages are still forecasting two U.S. Federal Reserve interest-rate cuts 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 Middle East war.
UBS Global Wealth Management and Morgan Stanley became the latest brokerages to revise their forecasts for the central bank, joining peers such as Goldman Sachs and Barclays to expect the first rate reduction in September, compared with June previously.
Earlier this month, the Fed left rates unchanged at its March meeting, as expected. Investors focused on a cautious tone by Fed Chair Jerome Powell - that the economic outlook remains uncertain amid a U.S.-Israeli war with Iran.
Money market participants are no longer pricing in any easing from the U.S. Federal Reserve this year, compared to two rate cuts before the Iran conflict erupted, according to the CME Group's 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 June, July and September) | 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 June and July) | 3.00%-3.25% |
50 bps | 2 (in June and September) | 3.00-3.25% | |
Nomura | 50 bps | 2 (in June and September) | 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% |
Standard Chartered | No rate cuts | - | 3.50%-3.75% |
Rate hike (in H1 2027) | - | - |
(Compiled by the Broker Research team in Bengaluru; Editing by Arun Koyyur, Sriraj Kalluvila, Mrigank Dhaniwala, Maju Samuel and Shinjini Ganguli)
((JoelJose@thomsonreuters.com;))