While everyone is still debating when the Federal Reserve will start cutting interest rates, Barclays Bank has already provided a precise forecast pointing to 2026—this prediction could change your view of the market trends over the next two years.

According to the latest report, the Fed may kick off its rate cuts as early as March 2026, followed by a second round in June, each reducing by 25 basis points. If the pace goes smoothly, there might be another cut in September, totaling a 75 basis point reduction. Sounds aggressive? But their logic actually holds up quite well.

The signals recently released by the Federal Reserve also hint at this. In the December meeting minutes, officials emphasized the need for "more data to observe," and by the January 27-28 meeting, it was basically confirmed that rates would remain unchanged (the current federal funds rate range is still 3.50%-3.75%). From the Fed’s dot plot, the median forecast for the year suggests only one 25 basis point cut, which is much more conservative than market expectations.

Barclays’ judgment is based on a clear foundation: inflationary pressures continue to ease, although still slightly above the 2% target, the overall trend is positive. Economic growth is also looking good, with the 2026 GDP forecast raised to 2.3%, and the labor market experiencing a soft landing. In this context, the Fed doesn’t need to pursue aggressive easing but should gradually guide interest rates toward a neutral level.

This "two-step" or even "three-step" script acts like an advanced navigation chart for traders and investors. While most are still chasing short-term fluctuations, understanding this policy framework in advance can help you view the market from a higher perspective.