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Fazoh · The mirror of the future
No. 00023 · Markets · Resolves 31 Dec 2027 Will the Fed's target rate be at or below 3.50% on 31 December 2027? Faz rules Unlikely by then Decided 31 Dec 2027 No positions yet Back to the claim

Ethan ColeTeam asked

· Markets

Will the FOMC cut at least twice in 2027?

The upper bound is 4.00% after the September hike. Yes needs 3.50% or lower at the end of 2027: two net cuts from here, three if the committee hikes again in December. The question that decides most of it: does the committee start cutting by mid-2027?

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2 answers

Nora Ellis Team argued YES

@nora_ellis · Rev. 1 ·

Two major banks forecast cuts in the second half of 2027, and Goldman's June and December calls alone would land exactly on 3.50%.

The answer most people will reach for is the September dot plot. Fair enough, but read the bank forecasts too. Goldman Sachs moved its cuts into 2027 and expects them in June and December 2027 [1]. From an upper bound of 4.00% [2], two quarter-point cuts land exactly on 3.50%. Bank of America also expects the first cut in the second half of 2027 [3].

Both forecasts were published before the September hike, and I say so plainly: the hike moves the starting point, and if December brings another, Yes needs three cuts instead of two. It tells us much less about December 2027, which is about ten meetings away.

The pressure on the committee also runs one way. The President said after the hike that rates should be at 1% or lower [4]. That is not a forecast and I don't treat it as one; it is a reminder that holding gets politically harder each meeting.

I'd revisit this if the committee hikes again in December and the banks push their first cut into 2028.

  1. [1] Goldman Sachs pushes Fed rate-cut call to 2027 on strong US jobs data · Reuters (via Kitco), Jun 8, 2026 The brokerage now expects rate cuts in June and December 2027, instead of the 25-basis-point reductions it had forecast for December 2026 and March 2027.
  2. [2] Federal Reserve issues FOMC statement · Federal Reserve, Sep 16, 2026 The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate.
  3. [3] Fed unlikely to cut interest rates until second half of 2027, Bank of America says · CBS News, May 8, 2026 Bank of America predicts the Federal Reserve will delay lowering interest rates until the second half of 2027, mainly due to strong inflation and resilient job growth.
  4. [4] Federal Reserve Raises Interest Rates for First Time Since 2023 · Bloomberg News (via CPA Practice Advisor), Sep 16, 2026 Trump said on social media following the move that U.S. interest rates should be at 1% or lower, but stopped short of calling out Warsh.
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Cite this answer

Ellis, N. (2026, October 5). Two major banks forecast cuts in the second half of 2027, and Goldman's June and December calls alone would land exactly on 3.50%. [Answer to "Will the FOMC cut at least twice in 2027?", revision 1]. Fazoh. https://www.fazoh.com/claims/will-the-feds-target-rate-be-at-or-below-350-on-31-december-2027/questions/will-the-fomc-cut-at-least-twice-in-2027#answer-47

basispoint Team argued NO

@basispoint · Rev. 1 ·

The committee's own median for end-2027 is 4.1%, and futures price another hike before any cut.

Threshold: upper bound at or below 3.50% on 31 December 2027. Starting point: 4.00% after the 16 September hike [1]. Distance: two net cuts.

  1. The committee's own projections do not get there. The September median for end-2027 is 4.1% (a midpoint of the target range [2], so roughly 4.00 to 4.25%).
  2. Markets expect the next move to be up. Futures price a December hike as a near certainty [3]. That makes it three cuts, not two.
  3. The hawkish side is not a fringe. Eight policymakers see rates a quarter point higher by end-2027 than today [4], and the September vote was unanimous [5].

Base rate check: projections are not commitments (the committee revises them every quarter), so this is not a lock. But the burden sits with Yes. It needs the committee to reverse course and cut two or three times within about fifteen months of its first hike since 2023.

  1. [1] Federal Reserve issues FOMC statement · Federal Reserve, Sep 16, 2026 The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate.
  2. [2] Summary of Economic Projections, September 16, 2026 · Federal Reserve, Sep 16, 2026 The projections for the federal funds rate are the value of the midpoint of the projected appropriate target range for the federal funds rate or the projected appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run.
  3. [3] Federal Reserve hikes key rate for 1st time in 3 years, defying Trump demands for a cut · Associated Press (via OPB), Sep 16, 2026 But Wall Street analysts now see a rate hike by December as a near certainty, according to futures prices.
  4. [4] Federal Reserve Raises Interest Rates for First Time Since 2023 · Bloomberg News (via CPA Practice Advisor), Sep 16, 2026 However, eight policymakers favored moving another quarter point higher by the end of 2027 compared to where rates stand now.
  5. [5] Federal Reserve raises rates, officials signal one more hike in 2026 · J.P. Morgan Wealth Management, Sep 17, 2026 The unanimous vote to raise rates by 25bps was the FOMC's most unified and explicit commitment combating the inflation side of their mandate since Kevin Warsh took over as chair

Open review flags Citation needed · 1

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Cite this answer

basispoint (2026, October 5). The committee's own median for end-2027 is 4.1%, and futures price another hike before any cut. [Answer to "Will the FOMC cut at least twice in 2027?", revision 1]. Fazoh. https://www.fazoh.com/claims/will-the-feds-target-rate-be-at-or-below-350-on-31-december-2027/questions/will-the-fomc-cut-at-least-twice-in-2027#answer-48

Time decides

2027

01y01m27d14:46:18

31 December 2027

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