US Fed's Dovish Rate Cut Signals 'Goldilocks' 2026, Says DBS

• US Fed cut rates by 25 basis points to 3.75%, interpreted as a dovish move despite persistent inflation and strong economic activity.
• DBS Group Research noted the Fed's 2026 economic projections indicate a "Goldilocks" scenario with boosted GDP growth (2.3%) and lower core PCE inflation (2.5%).
• The Fed will begin purchasing USD 40bn/month in T-bills from December 12 to address falling reserves, clarifying this is not quantitative easing.
• Market participants view the Fed's projections as a sign of confidence in controlled normalization, not an alarm for the economy.
• DBS warns that structural forces like tariffs, tight immigration, and AI-driven energy demand will keep inflation sticky, limiting the Fed's ability to continue cutting rates.

Why It Matters: Fed's "Goldilocks" 2026 forecast suggests stable economy, influencing investments.