When Will the Fed Actually Cut Rates? Barclays' 2026 Outlook Challenges Rate Cut History Expectations

The Federal Reserve’s interest rate trajectory just got clearer. Barclays’ U.S. economics team is sticking with its forecast: two consecutive rate cuts of 25 basis points each, likely occurring in March and June 2026. This projection stands firm despite broader market uncertainty about the central bank’s policy path.

What’s particularly interesting is how Barclays reads the risk dynamics. Rather than viewing the baseline scenario as most probable, economists suggest the real danger lies in postponement—that rate cuts could come even later than scheduled. This contrasts sharply with the fed rate history where cuts typically follow softer economic data or inflation retreats.

The December Federal Open Market Committee minutes provide crucial support for this thesis. The messaging from that meeting aligns remarkably well with Barclays’ expectations, while signaling that January’s policy decision will likely hold steady. Officials aren’t rushing to adjust course just yet.

Here’s the reasoning: the FOMC needs breathing room. After implementing recent rate reductions, policymakers want adequate time to observe how these moves ripple through economic activity, lending patterns, and inflation metrics. Premature additional cuts could trigger unintended consequences, which is why the March-June timeline makes sense—it provides a natural assessment window.

The bottom line? Barclays’ forecast reflects a measured approach to monetary policy, prioritizing data evaluation over reactive policy shifts. Whether this timeline holds or gets disrupted will depend heavily on incoming employment reports and inflation data over the next several months.