Fed Rate-Cut Expectations Slashed, Easing Now Seen in Late 2026

Investor expectations for Federal Reserve interest rate cuts in 2026 have cooled dramatically in early March, as resurgent oil prices reignite inflation risks and push policymakers to maintain a restrictive monetary stance for longer. Top financial institutions and bond markets have both revised their rate forecasts sharply lower, delaying expected easing well into the second half of the year.
Goldman Sachs, one of the leading Wall Street banks, recently adjusted its Fed policy outlook significantly. The firm previously predicted two 25-basis-point rate cuts in June and September 2026, but now expects only two cuts in September and December, with no easing in the first half of the year.

Bond market pricing tells a similar story: interest rate swaps now price in just 24 basis points of total rate cuts for all of 2026 — less than one full standard 25-basis-point cut — a steep drop from earlier forecasts of multiple reductions throughout the year. Short-term U.S. Treasury yields have climbed in response, with 2-year yields approaching 3.70%, reflecting fading optimism for quick rate relief.

Fed officials have maintained a consistent cautious tone in recent public statements, emphasizing that persistent inflationary pressure, especially from rising energy costs, means monetary policy will stay tighter than previously expected. Most policymakers agree that cutting rates too soon could allow inflation to reaccelerate, making patience a core priority for the Fed in 2026.