How many Fed rate cuts in 2026?

The market is asking whether the Fed will finish all of 2026 without any cuts, and the current price implies that outcome is considered highly likely. A 93% yes price means traders are effectively saying the most plausible path is continued policy restraint, either because inflation remains sticky, growth stays solid enough to avoid pressure, or the Fed prefers to wait for clearer disinflation before easing. That is a defensible baseline, especially this late in the year, because the Fed tends to move slowly when it is uncertain and because one or two upcoming meetings can easily pass without action if data are mixed.

Against that, it is hard to ignore that the market only needs one 25 bp cut for this bet to lose, and by September there are still enough decision points left for the Fed to react if the economy weakens even modestly. The key issue is not whether the Fed is ready to launch a deep easing cycle, but whether conditions deteriorate enough to force a single symbolic cut. Labor market softness, slower real activity, or a calmer inflation trend could all be enough to justify one cut before year-end, especially if policymakers want to avoid staying too restrictive for too long. That makes the no-cut outcome plausible, but not nearly as close to certain as the market price suggests.

Historical Fed behavior also argues against treating a zero-cut year as the default once the economy starts showing disinflation and policy is still restrictive. The Fed often waits for confidence, but it also tends to move once the balance of risks shifts toward growth or employment, and it usually does not need a crisis to begin trimming rates. If inflation cools and unemployment edges higher, even slightly, the committee can choose to cut once and then pause. On the other hand, if growth remains resilient and inflation proves stubborn into the final meetings, the Fed could indeed finish 2026 unchanged. My assessment is that the no-cut scenario is credible, but the probability of at least one cut is still materially higher than the current market-implied odds would suggest.