Fed consensus shifts to hawkish rate cut as dot plot likely to confirm 2026 policy split

Markets have fully priced in a Federal Reserve rate cut this month, with consensus shifting toward a hawkish cut, BNY Mellon analysts said in a report on December 8. They said any further monetary easing hinges on whether economic data weaken or inflation falls further in March and June 2026. The FOMC is set to release its dot plot, likely confirming recent policy divisions, and they expect a marked split in members' views on the 2026 policy path. They added that the upcoming change in the Fed Chair poses a risk as markets reassess the policy stance of the new leadership.