Dutch International: Still Expects Fed to Cut Interest Rates Twice in 2026

BlockBeats News, December 11th, a Dutch international bank stated that the market expects the Fed to cut interest rates by another 50 basis points in 2026. Given that the current economy is still growing, the unemployment rate is low, the stock market is near its all-time high, and the inflation rate is closer to 3% rather than the Fed's 2% target, it seems that there is not much need for the Fed to further ease its policy.

Nevertheless, the Dutch international bank suspects that the inflation backdrop in the coming months will become more conducive to rate cuts, providing further justification for dovish action. Despite lingering tariff threats, their impact has been slower and less severe than feared. This has bought more time to alleviate inflationary pressures through energy price declines, a slowdown in housing rent growth, and weakened wage growth. The Dutch international bank believes this will drive inflation closer to 2% faster than the Fed expects.

Moreover, as the employment part of the Fed's dual mandate appears more concerning (note that Powell has said the Fed believes recent job growth data has been overstated by 60,000), the Dutch international bank expects the Fed to cut rates twice in 2026, predicting 25 basis points cuts in both March and June. (Orient Securities)