Rate Cut Bets Grow for 2026 as Markets Price in Easing Cycle
While the Fed shows no immediate signs of shifting rates, long-term policy expectations are gaining traction. Current forecasts indicate a 27% probability of a 50bps cumulative rate reduction by 2026, marking it as the most anticipated dovish scenario in the medium term.
Short-Term Rates to Hold Steady
Market consensus strongly favors a pause in the upcoming meeting, with a 97.4% chance of no rate change. A 25bps cut remains unlikely at just 2.1%, reflecting the Fed’s cautious stance despite easing inflation pressures.
Potential Rate Cut Scenarios by 2026
- 50bps cumulative cut: 27% probability
- 75bps cut: 24% chance
- 100bps cut: 16% probability
- 125bps cut: 11% likelihood
These projections suggest growing concern over future economic momentum and a gradual shift toward accommodative monetary policy.
Market Implications: Bonds and Rate-Sensitive Assets in Focus
Rising rate cut expectations have already pushed long-term Treasury yields lower. If the Fed begins easing in 2026, financial markets could see a broad repricing, with interest-rate-sensitive sectors poised to benefit.