Fed Rate Outlook: Scenario Analysis After Q1 2026 Hold
With the Fed expected to hold rates at the March FOMC, we analyze divergent market expectations regarding the timing and magnitude of second-half rate cuts.
Current Rate Environment
As of February 2026, the US federal funds rate remains in the 4.25-4.50% range. Chair Powell recently noted that inflation is approaching the 2% target but pointed out that services sector inflation remains elevated.
Market Expectations vs Fed Dot Plot
According to CME FedWatch, the probability of a March FOMC rate hold stands at 92%. However, the probability of a June cut is split at 55%.
The Fed's latest dot plot suggests a total of 2 cuts (50bp) in 2026, but the market expects 3-4 cuts, creating a disconnect.
Three Scenarios
Scenario 1: Base Case (50% probability)
Scenario 2: Dovish (25% probability)
Scenario 3: Hawkish (25% probability)
Asset Class Impact
|-------|-----------|-----------|------------|
📊Related Stocks
💡Methodology
This analysis is auto-generated by AI combining investment bank reports, earnings data, market data, and news sentiment. Not investment advice.
📖Related Analysis
Financial Sector Dividend Play: Analyzing KB, Shinhan, and Hana Value-Up Program Benefits
As Korean financial holding companies expand their participation in value-up programs, dividend yields and share buybacks are driving stock price appreciation.
2026 Global Recession Risk Assessment: Soft Landing or Hard Landing?
As US economic slowdown signals emerge, we examine global recession probabilities and asset allocation strategies.
Korea Value-Up Program: Optimal Time for Dividend Stock Investment
Korean government Value-Up program accelerates shareholder returns from low-PBR companies.