Nomura and Standard Chartered Join Brokers Predicting Fed Rate Cut
Two major global banks reversed earlier views and joined a growing number of brokerages expecting a 25 basis point Federal Reserve rate cut at the Dec. 9 and 10 policy meeting, a move that helped cement market expectations for easier monetary policy. The shift matters because it signals increasing confidence that recent softer U.S. data and dovish Fed commentary have tilted the policy outlook, with implications for borrowing costs, asset prices and the Fed policy path in 2026.
Nomura and Standard Chartered reversed earlier positions and on Dec. 8 joined a cohort of large global brokerages forecasting a 25 basis point Federal Reserve rate cut at the Dec. 9 and 10 meeting, Reuters reported. The changes followed a run of softer U.S. economic data and dovish remarks from Federal Reserve officials that together pushed financial markets to price in a high probability of a quarter point reduction.
Market pricing via the CME FedWatch tool showed very high odds of a 25 basis point move, reflecting broad-based shifts in expectations among sell side and buy side participants. Several other top global firms moved to a cut call in the days leading into the meeting, amplifying the sense among traders that the Fed was poised to move toward easier policy after more than two years of tightening.
Analysts cautioned that the decision remained close and that the Fed could produce dissents. Nomura specifically flagged the possibility of hawkish dissents among FOMC members, underscoring that even as markets largely priced a cut, policymakers were still weighing upside risks to inflation and the labor market. That uncertainty matters for the way markets interpret the Fed statement and post meeting communications, since any signal that the committee remains divided would temper the scale and timing of future easing.
The reversal by two established global banks reflected a convergence of signals. Recent indicators of slower consumption and cooling price pressures reduced the near term case for keeping policy unchanged, while Fed speakers emphasized a cautious approach that nevertheless left room for easing if the data warranted. For markets this meant that short term interest rate expectations shifted decisively, and investors moved to reprice the path of policy into 2026.
A quarter point cut would have direct impacts across the economy. Lower policy rates typically reduce borrowing costs for consumers and businesses, ease mortgage rates over time, and lift valuations for rate sensitive assets. For banks, the effect on net interest margins can be mixed, depending on the shape of the yield curve and the pace of subsequent moves. Internationally, easier U.S. policy tends to weaken the dollar and provide breathing room for emerging markets that have faced capital outflows during tightening cycles.
Beyond the immediate market reaction, the flurry of cut calls from global brokerages highlights a potential turning point in the Fed normalization cycle. After aggressive tightening to tame inflation, policymakers are now confronting slower growth and a gradually easing inflation backdrop, which could open the door to a modest easing cycle in 2026 if data continue to soften.
Investors and policymakers alike will be watching the Fed statement, the committee projections and Chair commentary for guidance on future steps. The line between a one off quarter point reduction and a sustained easing trajectory will hinge on incoming data and how quickly inflation readings move back toward the two percent target. Reporting by Kanchana Chakravarty and Siddarth S of Reuters informed this account.
