BlackRock: Fed rate cuts in 2026 may be limited.
TL;DR
BlackRock strategists predict limited Fed rate cuts in 2026, as cumulative cuts of 175 basis points approach neutral levels. Further reductions are unlikely unless the labor market worsens sharply, with markets expecting only two cuts.
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According to ChainCatcher, BlackRock strategists Amanda Lynam and Dominique Bly stated in a report that the Federal Reserve is expected to implement only limited interest rate cuts in 2026.
With a cumulative interest rate cut of 175 basis points in this cycle, the Federal Reserve is approaching the neutral interest rate level. Unless there is a sharp deterioration in the labor market, the room for further rate cuts in 2026 is quite limited.
According to data from LSEG, the market currently expects the Federal Reserve to cut interest rates twice in 2026.