How Many Fed Rate Cuts Will We See in 2026?

The Federal Reserve made a significant move by cutting interest rates late last year, giving Wall Street a holiday gift. However, it seems that policymakers believe this cut is sufficient for now. Experts predict that there will be a total of two rate cuts in 2026, down from three in the previous year.

In 2025, the central bank implemented three consecutive quarter-percentage-point cuts, bringing the benchmark federal funds rate down to a range of 3.5% to 3.75%. Current projections based on futures market activity indicate a 56% probability of two or fewer rate movements this year. While it’s uncertain when the first cut of 2026 will occur, most experts agree that the Fed is unlikely to change rates at the upcoming meeting and probably won’t wait until autumn.

Derik Farrar, head of everyday banking and borrowing at U.S. Bank, suggests that the next rate cut may come around June, with minimal movement expected in the meantime. However, there is more ambiguity in interpreting the Fed’s actions this year, according to Ross Mayfield, an investment strategist at Baird. The uncertainty is partly due to President Donald Trump’s role in reshaping the rate-setting committee in 2026, including nominating a new chair to succeed Jerome Powell.

The decision on rate cuts is crucial as it can impact the economy significantly. Keeping rates too high for too long could lead to a recession, while keeping them low during an overheated economy could result in high inflation. There is more disagreement among policymakers than usual about how to strike the right balance, with some members willing to vote against decisions they disagree with.

While the Fed doesn’t directly set interest rates for products like mortgages and credit cards, its benchmark rate influences lenders when setting their rates. For savers, there is little chance of a return to higher savings account and CD yields seen a few years ago. Borrowers can expect current rates to remain stable, which may encourage them to make big-ticket purchases like homes and cars.

Experts believe there is little chance of the Fed raising rates in the near future, but credit card APRs are expected to remain elevated. It is advisable for individuals with credit card debt to focus on paying it off. Overall, the outlook for 2026 suggests a relatively stable interest rate environment, with minimal changes expected in the coming months.