Rabobank's Senior US Strategist, Philip Marey, has revised the bank's outlook for the United States Federal Reserve (Fed), citing a shift by the Federal Open Market Committee (FOMC) away from an easing bias ahead of Warsh’s first meeting as Chair [1]. Marey highlights that recent developments in the Middle East are likely to keep energy prices elevated for an extended period, contributing to a more persistent inflation outlook [1].
As a result of these factors, Rabobank now expects the Fed to delay its first interest rate cut until October 2026, with a second cut projected for January 2027. This is a change from their previous forecast, which anticipated cuts in September 2026 and December 2026 [1]. The report notes that several FOMC participants have publicly taken defensive positions in advance of the new Chair’s tenure, reinforcing the committee's move away from an easing stance [1].
No immediate market reaction or analyst opinions beyond Rabobank's forecast are discussed in the article. The focus remains on the implications of persistent inflation and elevated energy prices for the timing of Fed policy adjustments [1].
CONCLUSION
Rabobank now expects the Fed to delay its first rate cut until October 2026 due to persistent inflation and elevated energy prices. The FOMC's shift away from an easing bias signals a more cautious approach to monetary policy. Market participants may need to adjust expectations for Fed action accordingly.