🔹 According to BlackRock’s senior strategists, the Federal Reserve is likely to implement only limited rate cuts in 2026, unless the U.S. labor market experiences a sharp and sudden decline. Recent data shows the labor market is cooling slightly, but there are still no signs of a severe crisis or major weakness.
The U.S. unemployment rate reached 4.6% in November, the highest level since 2021. BlackRock notes that much of this increase is due to higher labor force participation and reduced government employment, and does not necessarily indicate a worsening overall labor market. From their perspective, the Fed currently views risks as balanced, with no strong evidence for serious concern.
BlackRock also points out that since September 2024, a total of 175 basis points of rate cuts have been implemented, bringing rates close to a neutral range—meaning levels that neither constrain nor overly stimulate the economy. Therefore, there is little room for aggressive expansionary policy in 2026, and further rate cuts would likely occur only in the event of a significant labor market downturn.
