Analysts at HSBC predict that although the U.S. Federal Reserve (Fed) is currently easing monetary policy, it may raise interest rates again in 2026. The forecast sparked concern because it suggested the Fed could adopt a tighter policy stance in the coming years.
HSBC analysts pointed out that uncertain factors such as global economic conditions, political developments, and market fluctuations may affect the Federal Reserve's future decisions. They believe that the outcome of the US presidential election may have an impact on fiscal and monetary policy. In addition, supply-side shocks, such as tariffs and changes in immigration policy, could also lead to higher interest rates.
HSBC laid out two possible scenarios: one involving fiscal tightening and further interest rate cuts, while the other sees a supply-side shock that could lead to higher interest rates. The bank believes the latter scenario could force the Fed to raise interest rates regardless of whether Jerome Powell remains as Fed chairman after his term ends in May 2026.
HSBC also admitted that if the Fed lags behind the curve and the United States experiences a hard landing in 2025, the Fed may still continue to cut interest rates in 2026.
It is worth noting that the Federal Reserve has cut interest rates by 50 basis points after keeping interest rates stable for 14 months. HSBC believes that although the inflation rate is still high, it has shown a downward trend and the labor market is showing signs of cooling, providing space for loose monetary policy.
"Of course, it is also possible that the Fed has started raising interest rates again by 2026, not because of political choices, but simply because the economy is responding more strongly than expected to the ongoing monetary easing cycle." HSBC analysts said.
HSBC’s forecast is a reminder that while the Fed is currently adopting accommodative monetary policy, it may face multiple challenges ahead. Investors and companies need to pay close attention to the policy dynamics of the Federal Reserve and changes in the global economic and political situation.
The content of this article is for reference only and does not constitute investment advice or an invitation, solicitation or recommendation for any investment product. Readers are advised to make their own judgment and seek professional advice.
Any information on the 852Fin platform ("852Fin Information"), including but not limited to product comparisons, product ratings, blog articles, etc., is for general education and reference purposes only and does not constitute or intend to constitute any regulated advice, trust, immigration , insurance, finance, investment or other professional advice, recommendation, approval, endorsement, invitation, sale of insurance, trust, immigration, financial or investment products.
852FIN reminds readers that the content contained in this article/video is mainly from public information online and does not constitute any professional advice. Readers should seek professional advice with specific questions about products or services.
852Fin Information does not consider your personal needs, and reading the relevant information should not be regarded as a personal suitability assessment, nor can it form the basis for any decision to purchase products/services.
852FIN and the author of the pen column are not responsible for any loss or damage caused by the information contained or omitted in the article.
Before purchasing any product or service, you should conduct your own research based on the information provided by the company that provides you with the product or service, and/or seek independent and professional advice from a licensed professional. 852Fin information is collected, verified, and updated from different channels with our best efforts. 852Fin and its related parties, agents, directors, officers, and employees will not be held liable for any claims or losses arising from the relevant information. 852Fin also does not guarantee or guarantee the accuracy, completeness and timeliness of the relevant information.
Discussion about this post