Barclays Reaffirms Interest Rate Cut Timeline: Two 25bp Reductions Expected in 2026

Barclays has reaffirmed its projection that the Federal Reserve will implement rate reductions throughout 2026, reinforcing earlier predictions with fresh confidence. According to the bank’s U.S. economic team, two sequential cuts of 25 basis points are penciled in for March and June, assuming the central bank follows its standard policy trajectory.

The December FOMC meeting minutes provided supportive signals for this outlook, as policymakers signaled their intention to move cautiously in the near term. Most notably, January’s policy decision is widely expected to hold rates steady, giving Fed officials more time to evaluate how previous rate adjustments have propagated through the economy.

What makes Barclays’ forecast particularly noteworthy is the bank’s risk assessment. Economists highlight that the probability of the Fed postponing these cuts exceeds the baseline scenario—a critical distinction for market participants. This asymmetry suggests that while the March-June cuts represent the most likely outcome, external economic headwinds could force the central bank to delay its easing cycle further into the year.

The timing of Barclays’ reaffirmation comes as investors carefully parse every Fed communication for clues about the interest rate trajectory. With inflationary pressures still a consideration and labor markets showing resilience, policymakers face competing pressures that could ultimately shift the interest rate cut schedule. The bank’s analysis implies that patience from the FOMC remains essential before committing to an aggressive easing regime in 2026.