Prepare for Zero Rate Cuts in 2026, Says JPMorgan

The Fed is scheduled to hold its next Federal Open Market Committee (FOMC) meeting on Wednesday, March 18, where it is widely expected to hold interest rates steady. However, the scenario of rates staying unchanged for the entire year has gained traction in recent weeks as the war in Iran has fueled inflation risks.

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JPMorgan expects zero rate cuts this year, driven by a tightening labor market and a slow disinflation process. This morning, the Bureau of Economic Analysis announced that core personal consumption expenditures (PCE) increased by 3.1% in January. Core PCE is the Fed’s preferred inflation gauge and remains well above the target of 2%.

Goldman, Morgan Stanley Expect One Rate Cut in 2026

Goldman Sachs predicts one rate cut this year in September, adjusted from its previous forecast for June. The firm notes that another rate cut could be on the table if the labor market deteriorates significantly. Traders are currently pricing in 36.3% odds of a 25-bps reduction in September, according to the CME FedWatch tool.

Morgan Stanley also calls for one rate cut this year, down from its previous estimate of two cuts. Chief Economist Michael Gapen added that the risks of higher prices are “tilted to the upside” while tariff uncertainty remains high.

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