How many Fed rate cuts in 2026?

As of late May 2026 there remains substantial uncertainty around the path of inflation and labor market strength, but the dominant macro narrative through 2024–2025 was one of gradual disinflation and a cautious Fed that prioritized price stability; absent a clear collapse in inflation or a sharp rise in unemployment, the Federal Reserve is likely to stay data-dependent and avoid preemptive cuts. Market-implied probabilities and fed funds futures that currently favor no cuts suggest participants still believe the Fed needs more time to be confident that inflation is sustainably at target, and that financial conditions and underlying service-sector inflation remain watch points.

Historically the Fed has been reluctant to cut until there is convincing evidence that inflation is persistently returning to 2 percent and that the labor market has softened enough to reduce wage pressures, so the institutional bias is toward waiting; this behavioral pattern increases the plausibility of zero cuts in a year where headline inflation decelerates only gradually. At the same time, balance-sheet runoff, communication priorities (avoidance of market disruption), and the political optics of cutting too soon create additional frictions against early or multiple cuts.

Key downside risks to the 'no cuts' outcome include a sharper-than-expected growth slowdown or financial stress event that would push the Fed to act, and faster disinflation that reduces the real cost of delaying cuts; conversely, upside support for no cuts includes persistent service inflation, tight labor markets, and a Fed that remains focused on avoiding a premature easing. Given the lack of up-to-the-minute public data in this assessment, I weight the baseline slightly in favor of no cuts while recognizing that new shocks or clearly improving inflation metrics could flip probabilities quickly in either direction.