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

December 11, 202X – A Dutch international bank said Wednesday that markets expect the Federal Reserve to cut interest rates by another 50 basis points in 2026. Given current economic growth, low unemployment, near-record stock markets, and inflation running closer to 3% than the Fed’s 2% target, the central bank appears to have little need for further policy easing. However, the bank expects the inflation backdrop in coming months to become more supportive of rate cuts, providing additional justification for dovish action. While lingering tariff threats remain, their impact has been less severe and slower to materialize than initially feared—buying extra time to ease inflationary pressures via declining energy prices, slowing housing rent growth, and weaker wage gains. The bank forecasts this will push inflation closer to the Fed’s 2% target faster than the central bank currently anticipates. Additionally, the employment component of the Fed’s dual mandate is a growing concern. Noting that Fed Chair Powell has stated recent job growth figures have been overstated by 60,000, the bank expects the Fed to deliver two rate cuts in 2026: 25 basis points each in March and June. (Source: Orient Securities)