Societe Generale economist Jan Groen notes that strong January US labour data have led the bank to upgrade its US growth outlook for 2026 and beyond. As the Federal Reserve has tied policy to labour market strength and inflation, Societe Generale now projects only one Fed funds rate cut in 2026, likely in June, with risks skewed toward a later move.

Strong jobs data reshape Fed expectations

"The January jobs report came in well above expectations, with labour market strength implied across a wide range of indicators."

"Given the recent labour market data as well as other high frequency activity measures, we’ve upgraded our outlook for growth for this year and beyond."

"As the Fed had signalled that as long as the labour market remains solid, they are keen to keep rates on hold, the upgrade in our economic outlook and continued elevated inflation means we also change our Fed funds rate outlook for this year."

"We now expect one rate cut in 2026, likely at the June FOMC meeting, with a risk that the data continues to force Fed policy makers to keep rates on hold to later in the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)