Nomura just ripped up its playbook on Federal Reserve rate cuts. The Japanese investment bank now expects the Fed to hold rates steady through all of 2026, abandoning its earlier forecast of two 25 basis point reductions in September and December of next year.
The numbers telling the story
In a research note dated May 21, Nomura pointed to a stubborn inflation picture that makes monetary easing look increasingly unlikely. The Consumer Price Index rose 3.8% year-over-year as of April 2026, marking the highest reading since May 2023.
Energy costs are doing most of the heavy lifting on the upside, surging 17.9% amid escalating tensions in the Middle East tied to the Iran conflict. A global memory chip shortage is piling on additional pressure, pushing consumer prices higher across categories that touch electronics and computing.
The Federal Reserve held its policy rate at 3.50%-3.75% following the FOMC meeting on April 28-29.
