Danske Research has changed its forecast for the US Federal Reserve. It now expects two 25 basis point rate cuts in June and September, not March and June. It also expects the policy rate to stay at 3.00–3.25% through 2026 and 2027.
This change follows a strong January jobs report, which weakens the case for a near-term cut. Even so, the forecast still suggests cuts could restart in summer.
Implications For The Policy Path
Danske points to slower wage growth, softer housing inflation, and the risk that private consumption may weaken. It calls the June meeting the first under Fed chair Kevin Warsh.
The article says it was produced with help from an artificial intelligence tool and reviewed by an editor.
We need to adjust our view, because a March rate cut is now unlikely. This is a direct response to the strong January jobs report, which showed 295,000 jobs added—well above our 180,000 forecast. As a result, the Federal Reserve can afford to wait until summer before it starts cutting rates.
This delay means front-end rate futures, such as March and May, may reprice higher to reflect a more hawkish near-term path. Markets will likely focus more on the June and September meetings for any cuts. Options strategies should be updated to fit the new timeline, with less value placed on near-term dovish outcomes.
Trading And Hedging Considerations
For the US dollar, a later rate cut offers support we did not expect a few weeks ago. The dollar may stay stronger for longer, especially versus currencies where central banks may cut sooner. In this setting, short-term call options on the dollar index could be a useful hedge or a speculative trade.
Equities fell during the aggressive rate hikes throughout 2025. A “higher for longer” policy stance could limit near-term stock gains. Traders may consider protective put options on major indices to hedge against disappointment from delayed easing. Volatility could rise as markets accept that stimulus may not arrive as soon as previously expected.
Even with the delay, we still see a strong case for cuts starting in June if underlying data keeps cooling. For example, average hourly earnings rose 3.9% year over year in January, down from 4.5% in late 2025. A new Fed chair taking over in June also adds uncertainty that could shape policy in the second half of the year.
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