Nomura Joins Peers Predicting Fed To Cut Rates This Week
Nomura became the latest global brokerage to forecast a 25 basis point cut by the Federal Reserve at its December policy meeting, citing dovish signals from Fed officials, softer U.S. data, and market pricing that has increased the odds of easing. The expectation matters because the size of the move and the wording of Fed guidance will shape markets and determine whether this begins a broader path of rate reductions in 2026.
Nomura said on Monday that it now expects the U.S. Federal Reserve to lower its policy rate by 25 basis points at the December meeting, joining a string of major brokerages that have shifted toward anticipating the first cut after an extended period of monetary restraint. The brokerage pointed to dovish commentary from key Fed officials, weaker than expected U.S. economic signals, and market prices that have ramped up the probability of a December reduction.
The decision remains close in Nomura's view, and the firm flagged the likelihood of multiple dissents on the Federal Open Market Committee. Some policymakers are expected to oppose a cut, creating the potential for a split vote that could complicate the Fed's message. Nomura emphasized that while a December cut is now widely priced in, the margin and the committee's policy language will be scrutinized for clues about the timing and scale of any further easing in 2026.
Markets have reacted to shifting expectations over the past weeks, with risk assets and interest rate sensitive sectors moving to price a lower path for borrowing costs. A 25 basis point reduction would be the first explicit easing move after an extended period of rate increases, and it would immediately influence mortgage rates, corporate borrowing costs, and the relative attractiveness of U.S. assets to international investors. Traders and portfolio managers will be particularly attentive to how the Fed describes the outlook for inflation and labor market slack, because that wording will determine whether markets see December as the start of a gradual easing cycle or a one off adjustment.
Policy makers face a balancing act. Softer growth data reduces near term pressure to tighten further, but the Fed continues to evaluate underlying inflation dynamics and labor market resilience. The possibility of dissent underscores divisions within the committee about how quickly to move once inflation trends appear to be moderating. If the Fed signals a cautious approach, markets may price only a limited number of cuts in 2026. If the language is more permissive about easing, expectations for multiple reductions next year would likely rise.
Economists and strategists will be parsing the Fed statement and the subsequent economic projections for changes in the median path for policy. Nomura's note highlights that the headline cut will matter less than the guidance that accompanies it. For households and businesses, the immediate effect will be a modest easing of borrowing costs if markets interpret the move as the start of an easing cycle. For investors, the greater uncertainty will be the sequence and scale of cuts in 2026, which will shape fixed income returns, equity valuations and the dollar.
As investors position ahead of the Fed meeting, Nomura and other brokerages expect attention to central bankers' communications to dominate market moves. The interplay between incoming data and Fed language will determine whether December's action is an isolated adjustment or the opening of a multi step easing phase next year.
