BlackRock's strategist forecasts that the U.S. Federal Reserve (Fed) has very limited room to cut interest rates in 2026, unless the labor market deteriorates significantly.
The report on 24/12 citing LSEG data shows that the market currently expects the Fed to implement 2 interest rate cuts in 2026, but BlackRock believes the Fed is close to the neutral interest rate level after the current easing cycle.
MAIN CONTENT
BlackRock: The Fed may only make limited interest rate cuts in 2026.
Total interest rate cuts in this cycle: 175 basis points.
LSEG: the market expects 2 interest rate cuts in 2026.
Fed interest rate forecast 2026: room for cuts is narrowing
BlackRock believes the Fed will only make limited interest rate cuts in 2026 as it has approached the neutral interest rate after a total reduction of 175 basis points.
According to the report, two BlackRock strategists, Amanda Lynam and Dominique Bly, assess that with a cumulative reduction of 175 basis points in this cycle, the Fed is nearing the neutral level. Once close to that threshold, the space to continue cutting in 2026 becomes small, implying that monetary policy is difficult to loosen further.
Conditions that could expand the room for cuts involve a significant weakening of the economy in the labor sector. The report emphasizes that without a sharp decline in the labor market, the Fed's ability to continue lowering interest rates deeply in 2026 is significantly limited.
Market expectations: 2 interest rate cuts in 2026
LSEG data indicates that the market currently expects the Fed to implement 2 interest rate cuts in 2026.
This expectation reflects the market's pricing of the policy trajectory in 2026, but it may deviate from BlackRock's scenario if the Fed prioritizes keeping interest rates close to neutral. With cryptocurrencies, changes in interest rate expectations often affect risk sentiment, but the original content did not provide any specific forecasts for the cryptocurrency market.
Source: https://tintucbitcoin.com/blackrock-du-bao-fed-giam-lai-suat-it-2026/
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