Wells Fargo "surrenders": No longer expects the Federal Reserve to cut interest rates this year

Wells Fargo Investment Institute updates its 2026 monetary policy outlook, no longer expecting the Federal Reserve to cut interest rates in the next year. The update indicates that more and more institutions believe the Fed may continue to hold steady to assess the complex and uncertain inflation landscape.

The financial institution states that any shift toward easing must be based on inflation rates steadily approaching the target level. However, inflation trends remain difficult to predict, especially considering geopolitical risks related to ongoing tensions with Iran. These developments could lead to short-term price pressures, particularly in energy markets, making the Fed’s decision-making process more complicated.

Although recent inflation increases may be temporary, Wells Fargo believes the overall risk environment currently favors a more cautious approach. Therefore, the bank expects the Fed to maintain its current stance, keeping the federal funds rate target range unchanged at 3.50% to 3.75%.