The U.S. Federal Reserve will deliver only two rate cuts in 2026, down from earlier projections, as the One Big Beautiful Bill Act injects $100 billion into the economy. RSM economists warn the stimulus will boost GDP while reigniting inflation pressures that ripple across global markets.
"Whenever you have that kind of money being injected into the economy, you're going to see higher GDP growth, but at the same time higher inflation," said Joe Nguyen, RSM economist. The fed funds rate will stay above 4% through mid-year, extending elevated borrowing costs for multinational corporations and banks worldwide.
The policy shift arrives as Fed Chair Jerome Powell's term nears its May 2026 expiration, creating uncertainty for international lenders. Danish bank Danske Bank reported solid 2025 results but noted widening consumer divides, with lower-income households cutting spending while wealthier segments maintain consumption.
"McDonald's losing low-income customers is a reflection of that," said Marisa DiNatale, Moody's Analytics economist. "A lot of the economic and policy headwinds are disproportionately affecting lower-income households." The bifurcation complicates credit risk models for banks operating across income segments globally.
European markets see opportunities despite U.S. policy uncertainty. "Both in Denmark and in our closest export markets, we see prospects for increased demand in 2026, alongside stabilised inflation and interest rates," said Las Olsen of Danske Bank. European institutions position for growth as American monetary policy enters a holding pattern.
Commercial real estate refinancing and corporate debt rollover face headwinds through 2026. Banks with significant CRE exposure worldwide endure margin pressure as U.S. rates remain elevated. Recession probability sits at 30%, down from earlier forecasts, but the extended high-rate environment tests global lending markets.