Before the Federal Reserve FOMC meeting, Wall Street economists are increasingly divided on the interest rate cut path this year.

BlockBeats News, January 26 — Wall Street economists’ expectations for a further rapid rate cut by the Federal Reserve are fading, markets expect no action until July. Sarah House, senior economist at Wells Fargo, said, “The longer they wait to cut rates, the higher the threshold becomes for justifying further easing from an economic perspective.”

While the consensus still leans toward a further rate cut eventually, some economists are beginning to doubt this. JPMorgan Chief U.S. Economist Michael Feroli predicts that the Federal Reserve will hold steady throughout the year. He said the Fed’s next move will be a rate hike in the second half of 2027.

HSBC Chief U.S. Economist Diane Swonk stated in an interview that the Federal Reserve is in a “dilemma.” On one hand, inflation remains stubborn. On the other hand, there appears to be no income growth to help strengthen the labor market and push the economy forward, she said.

Stifel Chief Economist Lindsey Piegza, in a report to clients, said there are divisions within the Fed — some are increasingly worried about a lack of hiring momentum, while others remain concerned about persistent high inflation pressures. She said that at least some Fed officials are still worried that any further policy easing could accelerate inflation. Former Dallas Fed President Robert Kaplan, in an interview, said that until there is clear evidence that inflation is trending downward, Fed officials will be reluctant to cut rates again.

Financial market pricing indicates that the Fed may not cut rates until July, which would be after Powell’s chairmanship ends in May.