How many Fed rate cuts in 2026?

The case for no cuts in 2026 has strengthened materially over the course of the year, especially after the latest labor-market data came in stronger than expected and prompted a broad repricing toward a more restrictive policy path. That shift matters because the market is not just debating timing anymore; it is now debating whether the Fed needs to ease at all this year. When futures can move from pricing cuts to even entertaining a hike, it signals that the macro backdrop has become firm enough to make a no-cut outcome genuinely credible. In that sense, the zero-cut scenario is no longer a fringe outcome and deserves a meaningful probability estimate.

At the same time, the Fed’s own prior guidance still argues against treating no cuts as the default. The December 2025 projections reportedly leaned toward one 25 bp cut in 2026, which means the central bank entered the year with an easing bias rather than a commitment to hold unchanged. That is important because the Fed usually does not need a perfect excuse to trim rates once disinflation resumes or growth slows; it often responds preemptively to signs that policy is becoming too tight. If the labor market loses momentum, or if inflation continues to moderate without reigniting, the Fed would have room to deliver at least one small cut even without a recession.

The market price also looks heavily influenced by near-term data rather than the full-year distribution of outcomes. A very high Yes price implies that traders believe the current strength in employment and the persistence of inflation will persist through the rest of 2026, leaving the Fed with no reason to ease. That is possible, but not the only realistic path. The remaining meetings and the potential for slower growth later in the year create a substantial tail risk for at least one cut, especially if financial conditions tighten on their own or if policymakers decide that real rates are too restrictive. So while the no-cut scenario is credible and arguably underappreciated by the broader market, I still put it below even odds because the Fed has enough flexibility, and enough time remains, for one modest easing move to happen.