What Fitch's Interest Rate Predictions Mean for the First Half of 2026

According to recent analysis, ratings agency Fitch is forecasting significant shifts in monetary policy. The firm expects the Federal Reserve to execute two rate cuts during the initial six months of 2026, which would bring the federal funds rate upper bound down to 3.25%.

This interest rate prediction represents a meaningful pivot from current policy stance. The timing of these cuts in the first half of 2026 suggests Fitch believes economic conditions will warrant policy easing by that period.

For market participants tracking interest rate movements, these projections carry substantial implications. A reduction in the federal funds rate upper limit to 3.25% would represent a cumulative decrease from current levels, potentially influencing everything from borrowing costs to asset valuations across markets.

The dual-cut scenario that Fitch is modeling underscores how major financial institutions are positioning their interest rate predictions for the coming year. Whether these forecasts ultimately materialize will depend on inflation trends, employment data, and broader macroeconomic conditions throughout 2025 and into 2026.