Emre Yumlu 
The U.S. Federal Reserve’s (FED) latest interest rate decision, announced yesterday, met market expectations with a 25 basis point cut. However, the optimism that initially followed quickly faded after Federal Reserve Chair Jerome Powell’s cautious statements, which cast doubt on the likelihood of another rate cut in December. Following Powell’s remarks, several financial institutions adjusted their forecasts — among them, Japanese banking giant Nomura, which made a significant revision to its outlook for the FED’s next moves.
Nomura Withdraws Its December Rate Cut Expectation
In its updated projection, Nomura stated that it now expects the FED to keep interest rates unchanged during the December policy meeting. The institution had previously forecasted another 25 basis point cut, but Powell’s hawkish tone and the “wait-and-see” stance adopted by several FOMC members prompted a reassessment.
According to Nomura, upcoming economic data could still display mildly dovish trends, but the overall weakness may not be strong enough to reignite concerns over a deteriorating labor market. This view reflects a cautious sentiment that the FED may prefer to pause rate cuts temporarily rather than risk over-stimulating the economy.
Powell’s Hawkish Stance Shakes Market Confidence
During his post-meeting remarks, Powell noted that several committee members were in favor of taking a step back after two consecutive rate cuts, signaling a possible pause in the easing cycle. His statement — “A December rate cut is not guaranteed” — dampened market expectations and disappointed investors who had priced in another cut before the end of the year.
According to data from the Chicago Mercantile Exchange (CME) FedWatch Tool, there is now a 70.4% probability that the FED will hold rates steady in the 3.75%–4.00% range at the December FOMC meeting, while markets are even pricing a 29.6% chance of a rate hike.
Nomura’s Long-Term View: Rate Cuts Expected in 2026
Despite the near-term revision, Nomura maintained its longer-term forecast for monetary easing. The bank expects three 25 basis point rate cuts in 2026, specifically in March, June, and September, signaling that the next easing cycle may be more gradual and data-driven.
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