Fed likely to hold rates through 2026 amid strong US economy, inflation pressures

The Federal Reserve is likely to maintain interest rates through 2026, with the “Will no Fed rate cuts happen in 2026?” market at 40.2% YES, up from 35% a week ago.

Russell Investments strategist Paul Eitelman points to resilient U.S. growth and persistent inflation pressures as reasons for a pause in rate cuts. His analysis corresponds with a 15% expected move in the market for a 50+ bps cut after the April 2026 meeting, with odds decreasing. The market tied to Fed decisions from January to April is also seeing expected decreases in YES odds as the pause pattern becomes less likely.

The “Will no Fed rate cuts happen in 2026?” market has daily trading volume of $74,163 (face value) and $29,925 in actual USDC. It takes $4,669 to move the odds by 5 percentage points, indicating moderate liquidity. The largest price movement in the last 24 hours was a 1.2% increase, with traders pricing in a rate hold. The “Will 1 Fed rate cut happen in 2026?” market reflects similar odds and trading activity.

At 40.2%, a YES share for no rate cuts in 2026 pays $1, a 2.5x return. The bet pays off if the Fed holds steady through the year because inflation and growth data don’t give the committee room to cut. The Fed’s next moves depend on incoming economic data rather than any preset trajectory toward cuts.

Traders should watch Jerome Powell’s press conferences for shifts in tone on inflation or growth. Upcoming FOMC minutes and the CME FedWatch Tool’s projections will signal whether the committee is moving closer to or further from a cut.

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