Major Wall Street investment banks said the U.S. Central Bank, the Federal Reserve (Fed), is expected to cut the benchmark interest rate roughly twice in 2026 and then hold steady for a while.
On the 20th (local time), the Bank of Korea (BOK) New York Office said this in a report titled "Outlook for the U.S. economy in 2026 and key issues," explaining major investment banks' views and features regarding the U.S. policy rate.
According to the Bank of Korea (BOK) tally, of 10 investment banks, six — ▲ Goldman Sachs ▲ Morgan Stanley ▲ Wells Fargo ▲ Barclays ▲ Bank of America ▲ Nomura — expect the Fed to cut rates twice next year by 25 bp each (1 bp = 0.01 percentage point).
By contrast, JPMorgan and Deutsche Bank projected one rate cut, while Citi and TD Bank expected a total of 75 bp in cuts next year.
Given that investment banks' forecast ranges were spread quite widely in the first half of this year, rate projections have recently converged to relatively similar outcomes.
The Fed, in its economic outlook released this month, also projected one 25 bp rate cut next year.
Investment banks also assessed that U.S. economic growth next year will be generally solid, and predicted that the unemployment rate and inflation will reach a record high in the first half before gradually declining.
The median of 2026 U.S. growth forecasts from 66 investment banks compiled by the Bank of Korea (BOK) as of Dec. 15 was 2.0%, similar to this year's estimated growth (2.0%).
The Bank of Korea (BOK) New York Office said, "Corporations that had been unable to fully pass tariff burdens on to consumer prices are likely to move to raise prices," but added, "Most tariff pass-through will be completed in the first half, and inflation is expected to slow in the second half."