Wall Street brokerages still expect the Federal Reserve to cut interest rates twice before the end of 2026.

Major brokerages still expect the Federal Reserve to cut interest rates twice in 2026, while the Fed's latest forecast only suggests a 25 basis point cut, due to escalating inflation concerns from the Middle East conflict. Morgan Stanley has become the latest brokerage to adjust its expectations for Fed rate cuts, joining Goldman Sachs and Barclays in predicting the first rate cut will be in September, rather than the previously expected June. Last week, the Fed, as expected, kept rates unchanged at its March meeting. Investors are focusing on cautious remarks from Fed Chair Powell. Powell stated that with ongoing conflicts between the US and Iran, the economic outlook remains uncertain. According to the CME Group's FedWatch tool, interest rate futures indicate that traders believe there is a very low possibility of a rate cut before mid-2027.