Federal Reserve: Policy to remain on hold through 2027 – Rabobank

Rabobank's RaboResearch Global Economics & Markets has revised its outlook on the Federal Reserve's monetary policy, projecting a rate hike in December 2026. This new forecast is a result of the Committee's heightened risk aversion towards the unanchoring of inflation expectations and a greater willingness to tolerate demand destruction in non-energy sectors.

Despite having only one more rate hike anticipated, the team believes that the Federal Reserve will maintain a hold on interest rates through 2027, followed by a gradual annual reduction in rates from 2028 to 2030. The Fed is expected to reach a higher neutral rate than currently projected.