PremiumThese Are Goldman's Top Rates Traders' Tactical Moves Ahead Of "Lukewarm" Fed Statement
With inflation sticky but not accelerating, the labor market cooling without collapsing, and fiscal stimulus set to support growth in early 2026, policy rates likely need to return to neutral, but not below, according to Seema Shah at Principal Asset Management.
"With a leadership change approaching, the Fed is likely to place slightly more emphasis on the employment side of its dual mandate,” she said.
“We expect two Fed cuts in 2026, taking rates close to neutral. Timing will be data-dependent, but a rising unemployment rate could prompt the cuts to be brought forward.”