Wall Street's 2026 Fed Forecast: Rate Cuts or a Hard Pause?

With the Federal Reserve holding interest rates steady, Wall Street’s attention is now turning to the long-term policy path through 2026. Forecasts from five major financial institutions reveal a significant divide on when—or if—the central bank will begin to cut rates.

While most analysts anticipate a cautious approach from the Fed, a clear consensus has yet to emerge. Here’s a breakdown of what JPMorgan Chase, Citigroup, Barclays, Bank of America, and Wells Fargo expect.

The Consensus View: 50 Bps of Cuts in 2026

Four of the five institutions surveyed are projecting a total of 50 basis points (bps) in rate cuts during 2026, though they differ on the precise timing.

• Barclays: Expects two 25 bps cuts, one in June and another in December. The bank believes the Federal Open Market Committee (FOMC) will signal it is in no rush, emphasizing that risks to employment and inflation are now balanced.

• Bank of America: Also forecasts 50 bps in cuts, concentrated in June and July. They note, however, that current market pricing leaves room for the Fed to deliver a relatively dovish surprise.

• Citigroup: Maintains its forecast for 50 bps of easing, with cuts in June and September. Citi argues that if the cuts are for policy normalization rather than a crisis response, policymakers will seek a broader consensus, which requires clearer progress on inflation.

• Wells Fargo: Projects cuts in March and June. The bank suggests that the longer the FOMC waits, the higher the economic bar becomes to justify further monetary easing.

JPMorgan's Contrarian Call: No Cuts on the Horizon

JPMorgan Chase stands apart from the crowd, forecasting no interest rate cuts at all in 2026.

The bank’s analysis suggests that after three previous rate cuts for risk management, many FOMC members now believe a pause is appropriate. According to JPMorgan, Fed Chair Jerome Powell will likely argue that the current policy stance is sufficient to manage risks under the Fed’s dual mandate while also avoiding political controversies.

Powell's Message: A Focus on Patience and Data

Across the different forecasts, a common theme is the expectation that Fed Chair Jerome Powell will reaffirm a patient and data-driven approach.

Powell is anticipated to stress that the current monetary policy is appropriate for assessing the effects of previous hikes. He is also expected to emphasize that the labor market has stabilized and that the committee will wait for more definitive signs of progress on inflation before committing to a change in direction. While he may face questions on other topics, like a Justice Department investigation, his commentary on monetary policy is expected to remain consistent and cautious.