Following three consecutive months of hotter-than-expected inflation metrics, major Wall Street research desks shifted their Fed funds rate path projections upward. Rates currently sit at 3.75%–4.00% following the Fed's September 2026 hike and October pause, with consensus pricing in another 25 basis point hike in December 2026.
Wall Street Bank Forecasts (Fed Funds Rate through End-2027)
Detailed Bank-by-Bank Breakdown
1. Goldman Sachs (Hawkish Shift)
Rate Path: Expects 25 bps hikes in December 2026 and March 2027, pushing the terminal range to 4.25%–4.50%.
Cut Outlook: Pushed back its forecast for the initial rate cut from September 2027 to December 2027. It expects four subsequent 25 bps cuts spread across 2028 to eventually settle at a 3.25%–3.50% terminal level.
Core Rationale: Persistent cost pressures in energy, tariffs, and AI data center demand create sticky near-term inflation, keeping policy restrictive until late 2027.
2. Deutsche Bank (Most Hawkish)
Rate Path: Anticipates three consecutive 25 bps rate hikes—December 2026, January 2027, and March 2027—raising the target range to 4.50%–4.75%.
Cut Outlook: Expects rates to stay at peak levels through all of 2027, seeing no rate cuts until 2028.
Core Rationale: Core CPI momentum and persistent broad services inflation leave the Fed little choice but to move monetary policy further into restrictive territory.
3. Bank of America
Rate Path: Shifted its base case to include 25 bps rate hikes in December 2026 and March 2027, reaching a terminal range of 4.25%–4.50%.
Cut Outlook: Sees no room for easing during the first half of 2027, predicting the first potential rate cut only in the second half of 2027.
4. J.P. Morgan Global Research
Rate Path: Projects a 25 bps rate hike at the December 2026 meeting (reaching 4.00%–4.25%), followed by an extended hold through most of 2027.
End-2027 Target: Sees the Fed funds rate averaging around 4.10% through year-end 2027.
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