Our perspective regarding central banks

Economic Outlook and Federal Reserve Policy for 2026

Following a series of four 25 basis point interest rate reductions in 2024 and three more in 2025, our projections indicate that the Federal Reserve will implement just two additional 25 basis point cuts in 2026. The economy remains robust, with stock markets reaching record levels. However, there are ongoing worries regarding the durability of employment gains and the risks associated with growth being heavily reliant on spending by affluent households and investments in technology.

Despite initial concerns that the President’s tariffs on imported goods would fuel inflation, price increases have remained more contained than anticipated. We anticipate that factors such as declining gas prices, a slowdown in rent increases, and moderating wage growth will help keep inflation on a downward path.