
Rabobank's RaboResearch Global Economics & Markets updates its United States (US) Federal Reserve (Fed) outlook, adding a December 2026 rate hike after recent FOMC speeches. The team highlights increased Fed risk aversion to unanchored inflation expectations and a greater tolerance for demand destruction outside the energy sector.
"After recent speeches by FOMC participants we change our Fed forecasts by adding a rate hike in December 2026."
"This is based on the Committee’s increased risk aversion to the unanchoring of inflation expectations and the higher willingness to accept demand destruction in sectors unrelated to energy, the sector where this year’s supply shock originated."

"However, with only one more rate hike to go, we still have fewer rate hikes in our forecasts than the new hiking cycle of 3-4 additional rate hikes that is priced in by the markets."
"Moreover, we now think that the Fed will remain on hold through 2027, followed by one rate cut per year in 2028-2030."
"We still think that the Fed will stop at a higher neutral rate than their current projection."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)