How many Fed rate cuts in 2026?
My assessment is that no Fed rate cuts in 2026 is the more likely outcome, but not by the extreme margin implied by the market. The balance of evidence points to a high chance of the Fed staying on hold through year-end, though a single cut remains a meaningful late-year risk.
Analysis
As of August 10, 2026, the Fed has already gone through much of the year without cutting, and the policy rate has remained in the 3.50% to 3.75% range since the December 2025 reduction. That matters because the remaining window is short: only the September, October, and December meetings are left, plus the remote possibility of an emergency move. For the market question to resolve Yes, the Fed only needs to make it through the rest of the year with no easing at all, which is now a plausible base case rather than a long shot.
The strongest argument for Yes is that the macro backdrop still looks stubborn enough to keep the Fed cautious. Recent commentary points to firmer-than-expected inflation and resilient economic data, and several private forecasts have moved to a full-year hold view. A hold at the last couple of meetings would fit the pattern of a Fed that wants more evidence before easing, especially if officials remain concerned that cutting too soon could rekindle price pressure. The recent unanimous holds also suggest that, for now, the Committee is not under obvious internal pressure to act quickly.
The main reason to be careful about overconfidence is that the Fed’s own June projections still leaned toward one 25 bp cut in 2026, which means zero cuts is not the official median expectation. If the labor market softens, if inflation eases faster than expected, or if financial conditions tighten abruptly, a cut could arrive in one of the remaining meetings and overturn the Yes outcome. Still, with only a few meetings left and current market pricing heavily favoring no cuts, the most likely path is continued patience rather than an easing cycle.
Arguments
For
- Recent Fed meetings have been holds, indicating the Committee is comfortable keeping policy restrictive for now.
- Sticky inflation and resilient activity reduce the urgency to deliver a cut before year-end.
Against
- The June Fed projection still pointed to one 25 bp cut in 2026, which is the clearest official argument against No cuts.
- A weakening labor market or softer inflation print could quickly shift the Fed from hold to easing in one of the final meetings.
Key drivers
- Only three scheduled FOMC meetings remain in 2026, which sharply limits the time available for a cut to occur.
- Inflation and growth have recently looked firm enough to support a continued hold rather than immediate easing.
- The Fed's June projections still implied one cut, so the outcome depends on whether incoming data worsen enough to force a change.
- Market and bank expectations have shifted hawkish, suggesting the probability of no cuts has risen materially.
Risk factors
- A sudden deterioration in labor-market conditions could push the Fed to cut at one of the remaining meetings.
- A sharper-than-expected cooling in inflation could make one cut politically and economically easier to justify.
- Any financial-market stress or recession scare could trigger a rapid policy response, including an emergency cut.
- The Fed's own forecast still leaves room for one move, so the baseline is not fully aligned with a zero-cut outcome.
Scenarios
Best case
Inflation remains sticky, growth stays resilient, and the Fed keeps rates unchanged at every remaining meeting, making the No-cuts outcome cleanly resolve Yes.
Most likely
The Fed continues to hold through the rest of 2026, with the most probable outcome being no rate cuts at all, although a late-year cut remains the main tail risk.
Worst case
Incoming data weaken enough to force a cut in September, October, or December, which would immediately make the No-cuts outcome resolve No.
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