Rabobank's Senior US Strategist Philip Marey updates his United States (US) and Federal Reserve (Fed) outlook, highlighting a shift by the FOMC away from an easing bias ahead of Warsh’s first meeting. Marey notes that developments in the Middle East are likely to keep energy prices elevated. As a result, Rabobank now expects the first Fed rate cut in October 2026 and a second in January 2027, later than previously forecast.

FOMC shifts and delayed rate cuts

"In recent weeks, the FOMC seems to have moved further toward dropping its easing bias, with several Committee participants staking out their position before Warsh’s first meeting."

"Meanwhile, the developments in the Middle East suggest that energy prices will remain elevated for longer."

"With our outlook for inflation higher and more persistent and the FOMC taking defensive positions against the new Chair, we now change our Fed view."

"Instead of a rate cut in September 2026 and another in December 2026, we now forecast the first cut in October 2026 and the second in January 2027."

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