Overview
- Goldman Sachs now projects the first Fed rate cut in December 2026 with a follow-up in March 2027, citing energy costs feeding into prices and core PCE staying near 3% this year.
- Bank of America expects no cuts in 2026 and two quarter-point reductions in July and September 2027, pointing to persistent inflation and a labor market that has not cooled enough.
- Market pricing shows a high chance the Fed holds rates at the June meeting and a growing possibility that the next move could be a hike before mid‑2027 if inflation remains firm.
- The Fed left rates at 3.50% to 3.75% at the April 28–29 meeting in a rare four‑dissent decision, underscoring divisions over how to respond to the inflation boost from higher energy.
- Analysts tie the inflation pressure to the US–Iran conflict that has lifted oil prices, a supply shock that passes through to gas and transport costs and tightens financial conditions for households and risk assets.