Deutsche Bank expects the Federal Reserve to deliver two more quarter-point rate cuts this year, in October and December, bringing the fed funds rate down to roughly 3.5% — a level the bank views as neutral.
The outlook is not without caveats. Analysts caution that if upcoming labour market or inflation data come in hotter than expected, policymakers could opt to skip one of those meetings, slowing the pace of easing.
Looking further out, Deutsche does not currently project additional reductions in 2026, arguing that its baseline economic forecasts are inconsistent with rates falling below neutral. Still, the bank sees the balance of risks skewed towards more, not fewer, cuts next year if growth falters or disinflation accelerates.
