Dutch International: Still expects the Federal Reserve to cut interest rates twice in 2026
BlockBeats news, December 11, Dutch International Bank stated that the market expects the Federal Reserve to cut rates by 50 basis points in 2026. Given that the current economy is still growing, the unemployment rate is low, the stock market is near historical highs, and the inflation rate is closer to 3% rather than the Federal Reserve's 2% target, there seems to be little reason for the Federal Reserve to further ease policies.
Nevertheless, Dutch International Bank is skeptical that the inflation backdrop will become more favorable for rate cuts in the coming months, thus providing further justification for dovish actions. Although tariff threats remain, their impact has arrived slower and weaker than feared. This has bought more time for energy prices to decline, rental growth to slow, and wage growth to weaken, which Dutch International Bank believes will push inflation to approach 2% faster than the Federal Reserve expects.
Moreover, as the employment part of the Federal Reserve's dual mandate appears more concerning (note that Powell has indicated that the Federal Reserve believes the employment growth data in recent months has been overestimated by 60,000), Dutch International Bank expects the Federal Reserve to cut interest rates twice in 2026, predicting reductions of 25 basis points each in March and June. (Jinshi)
