As inflation moderates and downside risks to economic growth emerge, leading global investment banks are converging on a forecast: the Federal Reserve will likely begin cutting interest rates as early as September 2026. This anticipated policy shift is becoming a focal point for financial markets worldwide.
Key Bank Forecasts at a Glance
Wells Fargo and Goldman Sachs both predict two 25-basis-point rate cuts in September and December, totaling 50 bps for the year. ANZ and TD Securities also expect the Fed to restart its easing cycle in the third quarter, likely at the September meeting. Bank of America is more aggressive, citing growth risks and forecasting a potential 50-basis-point cut later this year.
Standard Chartered suggests that once Waugh's nomination is confirmed, the Fed may shift focus to revitalizing the labor market, supporting rate cuts. Commerzbank believes pressure from the U.S. president could lead to a cut by year-end. Barclays and ING maintain that if inflation declines, the Fed will likely begin easing in September. BNY Mellon ties its outlook to geopolitics, expecting two cuts in Q4 if the Strait of Hormuz reopens.
Market Implications and Crypto Outlook
While minor differences exist on timing and magnitude, the consensus for a September rate cut is robust. CME FedWatch data shows over 70% probability of a cut in September. A shift to easing would mark the Fed's first formal rate reduction since the 2024 hiking cycle ended.
Historically, lower rates boost risk assets, including Bitcoin and cryptocurrencies, by weakening the dollar and increasing liquidity. However, investors should monitor inflation risks and geopolitical uncertainties that could disrupt the trajectory.