How many Fed rate cuts in 2026?

As of late August, no Fed cuts have occurred yet in 2026, which materially improves the outlook for this market because only the remaining meetings now matter. That timing advantage is important: to lose the bet, the Fed needs to deliver at least one 25 bp cut in the final stretch of the year, likely after a clear shift in the data rather than from routine policy drift.

The base case for no cuts is that the Fed still appears able to justify patience if inflation is not convincingly back to target and the labor market is only gradually cooling. In that environment, the committee can preserve optionality, avoid overreacting to monthly volatility, and wait for stronger evidence before easing. Central banks often prefer to keep policy unchanged when the balance of risks is mixed and the cost of cutting too early is seen as higher than the cost of waiting.

The main reason to be cautious about a very high probability is that only a modest deterioration in growth, hiring, or financial conditions could shift the discussion toward one cut by year-end. With several meetings still left, a single soft CPI report, a weaker payroll sequence, or a sudden tightening in credit conditions could quickly make a 25 bp cut seem appropriate. That keeps the downside to the no-cut outcome alive even if the current stance is broadly restrictive.

The market-implied price for no cuts is already high, and I generally agree with the direction of that pricing, but I would trim it slightly because policy surprises tend to come late when the committee has more data in hand. My view is that the most likely path is still no cuts, yet the probability of one late-year reduction is large enough to keep this below the market’s current level rather than above it.