Shift in expectations among major brokerages
Several leading financial institutions now anticipate that the U.S. Federal Reserve will trim interest rates by 25 basis points at its final policy meeting of the year. Nomura and Standard Chartered recently moved away from earlier predictions of a pause, aligning with firms such as J.P. Morgan and Morgan Stanley that have also revised their views.
Softer economic data for November and increasingly cautious messages from top Fed officials have reinforced expectations that policymakers will choose to ease borrowing costs rather than hold steady.
Dovish signals fuel confidence
Remarks from New York Fed President John Williams and San Francisco Fed President Mary Daly helped strengthen the outlook for a December adjustment. Analysts argue that recent communication suggests the Fed is focused on managing downside risks while maintaining gradual control of inflation trends.
Nomura noted that internal debate within the central bank could be visible, expecting multiple dissenting votes from both hawkish and dovish members if a cut is approved.
Policy path after December remains uncertain
Forecasts differ widely on how rate decisions will evolve through next year. Some strategists expect further easing depending on incoming data and changes in Fed leadership. With speculation building around Kevin Hassett potentially succeeding Jerome Powell, investors are watching for any indication of more aggressive stimulus.
Still, other analysts argue that limited data available since the government shutdown makes the decision finely balanced heading into 2026.
Market pricing shows strong conviction
Futures trading signals high confidence in a near-term reduction, with odds approaching 90 percent for a cut at the December 9-10 meeting, according to the CME FedWatch Tool. Investors now await the official statement for clarity on how long easing could continue if the economy stays resilient.
