Ahead of the Federal Reserve's critical interest rate decision, scheduled for announcement tomorrow at 22:00 Türkiye time, projections from the world's leading investment banks have become clear. While a majority of these institutions anticipate a 25 basis point interest rate cut, they generally agree that the accompanying decision text will carry a hawkish tone. Below are highlights of the institutions' detailed expectations.
Morgan Stanley's Outlook
Morgan Stanley expects the federal funds rate to fall to the 3.0%-3.25% range. The bank anticipates interest rate cuts in December, January, and April. Morgan Stanley believes tomorrow's statement will strongly signal that the “risk management reductions have been completed.” It projects that a few members may vote against the decision, but the dot plots are expected to remain unchanged.
JPMorgan's Forecast
JPMorgan also describes the impending decision as a “hawkish cut.” Expecting the announcement to signal smaller cuts in the future, the bank projects dot plot projections of 3.4% for 2026 and 3.1% for 2027. According to JPMorgan, the next and final cut could occur in January.
Bank of America's Expectations
Bank of America (BofA) anticipates additional balance sheet actions in addition to the 25 basis point cut. BofA expects the statement to adopt a tone that will make future cuts more difficult. It foresees approximately three Fed members potentially dissenting, with further cuts expected in June and July.
Deutsche Bank's Analysis
Deutsche Bank argues that the Fed will remain cautious about further cuts due to stronger economic growth and persistent inflation. The statement is expected to shift to a more hawkish tone, with the dot plot projected to settle at 3.4% for 2026 and 3.1% for 2028. Deutsche Bank anticipates the next cut to occur in September.
UBS's Predictions
UBS predicts that a majority of members will support the 25 basis point cut. The bank suggests the risk assessment may shift to a more balanced tone and expects at least two dissenting votes, particularly from Musalem and Schmid. According to UBS, inflation forecasts may be revised down slightly, and Chair Powell will likely emphasize the data-dependent theme by stating that they are “closer to neutral.”
Commerzbank's View
Commerzbank expects a 25 basis point cut, but it believes there could be numerous counter-threats. The bank anticipates Powell will balance the cut with hawkish communication and predicts only one more cut before Powell's term ends, with a stronger easing cycle commencing in June under the new chairman.
Goldman Sachs's Rationale
Goldman Sachs supports the rate cut due to the softening labor market. The bank states that the announcement will signal a “higher benchmark for future rate cuts,” and expects growth forecasts to be revised upwards while inflation forecasts are revised down slightly.
Citi's Assessment
Citi, for its part, is again characterizing the decision as a “hawkish cut.” The bank does not expect major changes to the dot plots and believes Powell will not completely rule out January or March cuts, while specifically avoiding a dovish stance.
Wells Fargo's Projections
Wells Fargo believes the Fed will continue to move toward a more neutral stance. The bank's dot plot projections are 3.4% for 2026, 3.1% for 2027–28, and 3.0% long-term. In its statement, Wells Fargo notes that three or four counter-arguments are possible, and that guidance may come in a softer tone, with interest rate cuts likely to continue by 25 basis points each in the first and second quarters (Q1–Q2).