Wells Fargo Scraps 2026 Fed Rate Cut Forecasts Amid Iran Conflict Risks

Wells Fargo Investment Institute has officially revised its long-term monetary policy outlook, removing previous expectations for Federal Reserve rate cuts in 2026. The bank attributed this shift to persistent inflation uncertainty and heightened geopolitical risks stemming from the ongoing conflict in the Middle East. Analysts noted that the prolonged nature of the war has introduced significant risk premiums, complicating the Fed's path toward normalization. This 'higher-for-longer' stance is expected to put pressure on equities and bonds while providing support for the U.S. Dollar. Market participants are now recalibrating their expectations as geopolitical instability continues to influence global economic stability. Gold prices may also remain supported as investors seek hedges against these escalating geopolitical tensions.