Standard Chartered: If the US economic momentum continues, further interest rate cuts may be difficult to achieve in 2026

Nicholas Chia and Steve Englander, analysts at Standard Chartered, said in a note that while the Fed is expected to cut rates for the rest of 2025, further cuts in 2026 would be less likely if US economic momentum remained strong. The analysts noted that in the medium to long term, this scenario could push up US dollar and Treasury yields. "We believe that market expectations of about 63 basis points of Fed rate cuts in 2026 could be phased out, particularly if US economic momentum continues and productivity growth exceeds expectations, which would push yields and the dollar further higher."