Log In Get Started
Economy March 12, 2026

Brokerages Push Fed Cut Expectations Later as Oil and Middle East Tensions Raise Inflation Concerns

Goldman Sachs delays its first 2026 cut to September; most major houses still expect easing next year though timing and magnitude vary

By Caleb Monroe
Brokerages Push Fed Cut Expectations Later as Oil and Middle East Tensions Raise Inflation Concerns

Goldman Sachs moved its projected first U.S. interest-rate reduction in 2026 from June to September after rising oil prices linked to the Middle East conflict stoked inflation worries. Ahead of the escalation, many brokerages were forecasting a June cut, but forecasts now range from multiple cuts beginning midyear to no cuts at all, with one firm calling for a late 2026 hike.

Key Points

  • Goldman Sachs delayed its first 2026 rate cut from June to September, now forecasting two 25-basis-point cuts (September and December) to 3.00-3.25%.
  • Brokerage forecasts for 2026 vary widely - from multiple cuts beginning in spring to no cuts, and one firm expecting a Q4 rate hike; many firms cluster around two 25-basis-point cuts to 3.00-3.25%.
  • Rising oil prices tied to the escalating Middle East conflict prompted renewed inflation concerns and prompted at least one major forecast revision.

Goldman Sachs on Thursday revised its 2026 interest-rate outlook, becoming the first large brokerage to shift its initial cut from June to September as higher oil prices tied to the escalating conflict in the Middle East revived concerns about inflation. The change leaves Goldman forecasting two 25-basis-point cuts in 2026 - in September and December - taking the federal funds rate to a 3.00-3.25% range by year-end.

The updated Goldman call departs from a number of other brokerages that, before the regional tensions intensified, expected the Federal Reserve to begin easing policy in June 2026. The Federal Open Market Committee is next scheduled to meet on March 18.

Brokerage forecasts for 2026

  • Citigroup - Total cuts: 75 bps; No. of cuts in 2026: 3 (in April, July and September); Fed Funds: 2.75-3.00%
  • Goldman Sachs - Total cuts: 50 bps; No. of cuts in 2026: 2 (in September and December); Fed Funds: 3.00-3.25%
  • Morgan Stanley - Total cuts: 50 bps; No. of cuts in 2026: 2 (in June and September); Fed Funds: 3.00-3.25%
  • BofA Global Research - Total cuts: 50 bps; No. of cuts in 2026: 2 (in June and July); Fed Funds: 3.00-3.25%
  • Wells Fargo - Total cuts: 50 bps; No. of cuts in 2026: 2 (in March and June); Fed Funds: 3.00-3.25%
  • Nomura - Total cuts: 50 bps; No. of cuts in 2026: 2 (in June and September); Fed Funds: 3.00-3.25%
  • Barclays - Total cuts: 50 bps; No. of cuts in 2026: 2 (in June and December); Fed Funds: 3.00-3.25%
  • UBS Global Research - Total cuts: 50 bps; No. of cuts in 2026: 2 (in July and October); Fed Funds: 3.00-3.25%
  • UBS Global Wealth Management - Total cuts: 50 bps; No. of cuts in 2026: 2 (in June and September); Fed Funds: 3.00-3.25%
  • Deutsche Bank - Total cuts: 25 bps; No. of cuts in 2026: 1 (in September); Fed Funds: 3.25-3.50%
  • BNP Paribas - No rate cuts; Fed Funds: 3.50-3.75%
  • HSBC - No rate cuts; Fed Funds: 3.50-3.75%
  • J.P. Morgan - No rate cuts; Fed Funds: 3.50-3.75%
  • Standard Chartered - No rate cuts; Fed Funds: 3.50-3.75%
  • Macquarie - Rate hike Q4

Before recent developments in the Middle East, the consensus among many brokerages had pointed toward the Fed initiating cuts in June. The shift by Goldman underscores how commodity-price moves and geopolitical risks can quickly alter firms' views on the timing of policy easing.

The list of forecasts highlights a wide range of views for 2026 - from multiple quarter-point cuts starting in the spring to no easing at all, and in one case a later-year increase. Several large houses cluster around two 25-basis-point cuts that would lower the target range to 3.00-3.25% by various months in 2026, while Citigroup alone expects a larger aggregate reduction of 75 basis points spread across three cuts.

Separately, promotional material accompanying the original release describes an AI-driven stock selection product that evaluates companies monthly across more than 100 financial metrics. It claims to have identified notable past winners such as Super Micro Computer (+185%) and AppLovin (+157%). The promotional text states the AI assesses fundamentals, momentum and valuation to suggest risk-reward opportunities.

Markets and policymakers will look to the Fed's March 18 meeting for further guidance on near-term policy, while brokerages continue to revise their models as inflation signals, commodity prices and geopolitical developments evolve.

Risks

  • Higher oil prices linked to the Middle East conflict could keep inflation elevated, complicating prospects for Fed rate cuts - this affects energy, consumer price-sensitive sectors, and interest-rate-sensitive markets.
  • Divergent forecasts among brokerages introduce uncertainty for financial markets and sectors sensitive to rates, such as banking and housing, as timing and magnitude of cuts remain unsettled.
  • Some major institutions project no cuts or even a late-year hike, creating a risk that markets priced for easing could face volatility if those firmer views prove accurate - impacting equities and fixed income.

More from Economy

Administration to Temporarily Waive Jones Act to Ease East Coast Fuel Flows Mar 12, 2026 CFTC Division Issues Guidance as Prediction Market Trading Expands Mar 12, 2026 CFTC Seeks Public Comment on Rules for Prediction-Market Event Contracts Mar 12, 2026 Brazil's Yearly Inflation Slows to 3.81% in February Ahead of Central Bank Meeting Mar 12, 2026 Economists Still See Fed Cutting Rates in June Despite Iran War-Driven Inflation Risks Mar 12, 2026