Nomura is telling clients to brace for a rare combination in 2026: solid global growth paired with stubborn inflation pressures. The firm’s investment and macro teams see a powerful mix of artificial intelligence spending, fiscal expansion and a recovering trade cycle lifting output, even as central banks struggle to push price gains back to pre‑pandemic norms. For investors, that means the next phase of the cycle could reward risk-taking, but only for those who respect the inflation side of the equation.
Rather than a clean “soft landing,” Nomura’s message is that the coming upturn will be messy, uneven and policy‑driven. Growth may look like a new boom, yet the backdrop of higher nominal rates, sticky U.S. inflation and diverging paths across Asia suggests a more complicated environment for portfolios than the headline numbers imply.
Nomura’s 2026 call: growth is back, but so is inflation
Nomura’s house view for 2026 is that the global economy is on the cusp of a renewed expansion, helped by what its strategists describe as pro‑growth policies and rapid productivity gains from artificial intelligence. In its internal CIO commentary, the firm even frames the coming years as a potential economic “Golden Age,” arguing that the combination of technology diffusion and supportive policy could lift trend growth above the gloomy expectations that dominated the early 2020s. That optimism is not abstract: it is grounded in a visible surge of AI‑related capital expenditure, from hyperscale data centers to semiconductor capacity, that is already reshaping corporate investment plans and labor demand, and which Nomura expects to keep driving output into 2026.
Yet the same forces that underpin this upbeat growth narrative are also the ones that threaten to keep inflation uncomfortably high. Large scale AI infrastructure spending is inherently resource‑intensive, while governments are leaning on fiscal expansion to support industrial policy, defense and energy transitions. Nomura’s investment director warns that this cocktail of strong demand and structural spending could keep price pressures from fully normalizing, even as headline inflation rates fall from their peaks. In that context, the firm’s reference to a coming Golden Age is less a promise of easy money and more a reminder that higher nominal growth usually comes with higher nominal rates.
AI and fiscal expansion: the engines of U.S. growth
Nowhere is this growth‑inflation trade‑off clearer than in Nomura’s outlook for the United States. The firm expects U.S. economic growth to reach 2.5% in 2026, a pace that would mark a clear acceleration from the slowdown fears that dominated earlier in the cycle. According to its analysis, that projection is driven primarily by an AI investment boom that is pulling in capital across cloud computing, chip manufacturing and enterprise software, alongside a deliberate fiscal expansion that keeps public spending elevated. The combination of private and public demand is expected to support consumption, business investment and employment, giving the U.S. economy a powerful tailwind into the middle of the decade.
At the same time, Nomura does not see this as a free lunch. The firm explicitly links its 2.5% growth call to expectations that the Federal Reserve will have to navigate a delicate balance between supporting activity and containing inflation. Its economists argue that the AI boom and fiscal stance will keep underlying demand strong enough that the central bank cannot simply slash rates back to pre‑pandemic levels without risking another inflation flare‑up. That is why the outlook for 2026 is framed as robust but conditional, with the Federal Reserve expected to remain a central character in the story rather than fading quietly into the background.
Trump’s policy mix and the risk of sticky 3% inflation
Nomura’s inflation warning is particularly pointed when it comes to the United States under President Donald Trump. The firm argues that the current policy mix, which leans heavily on tax incentives, tariffs and deregulation to spur domestic production, is likely to keep price pressures from fully receding. Its analysts say U.S. inflation could stick at around 3% next year, a level that is above the Federal Reserve’s 2% target but consistent with an economy running hot. In their view, Trump’s economic policies are designed to maximize growth and employment, not to engineer a rapid return to the pre‑pandemic inflation regime.
That assessment has significant implications for both monetary policy and markets. If inflation does settle near 3%, the Fed will face a choice between tolerating a higher steady‑state rate of price increases or tightening more aggressively and risking the very growth that fiscal and industrial policies are trying to secure. Nomura’s investment director leans toward the former, suggesting that the central bank is unlikely to change its stance significantly as long as growth remains solid and inflation is contained, even if it is not back at target. For investors, the firm’s message, delivered in a recent Nomura briefing, is that a 3% inflation world is not a crisis, but it does require a different playbook than the ultra‑low inflation era that preceded it.
Fed cuts in 2026: limited relief in a high‑nominal world
Nomura’s rate strategists expect the Federal Reserve to deliver only modest easing in 2026, even as growth holds up and inflation drifts lower from its recent peaks. Their baseline is that the Fed will cut rates twice over the year, a path that reflects both the resilience of the U.S. economy and the persistence of underlying price pressures. In other words, policy is likely to move from restrictive to merely less restrictive, rather than swinging back to the ultra‑accommodative settings that defined the 2010s. That limited relief underscores the firm’s broader message that investors should prepare for a structurally higher cost of capital.
This restrained cutting cycle also shapes Nomura’s view of global capital flows and currency dynamics. With U.S. rates still relatively high and the economy growing at 2.5%, the dollar is expected to remain supported, even if it gives back some ground as other regions recover. The firm notes that the Fed’s cautious approach will influence how other central banks calibrate their own policies, particularly in Asia, where some economies have already finished easing while others still have room to move. Its latest analysis of the Fed’s likely path is embedded in a broader assessment of how many times the central bank can realistically cut without reigniting inflation, a question that sits at the heart of its Fed seen cutting twice scenario.
Asia’s policy split: where easing is over and where it is not
While the U.S. wrestles with sticky inflation and only gradual rate cuts, Nomura sees a more fragmented picture across Asia. In its regional outlook, the firm argues that the broad easing cycle is largely complete, but that there is a clear split between economies that are already pivoting back toward neutral policy and those that may still need to support growth. It highlights differences in domestic demand, external exposure and inflation dynamics as key drivers of this divergence, with some central banks more constrained by currency and capital flow considerations than others. The result is a patchwork of policy stances rather than a synchronized regional move.
That split is especially evident in markets like South Korea, New Zealand, Australia and Malaysia, where Nomura says the easing cycle is effectively over. In these economies, stronger growth and firmer inflation have convinced policymakers that further cuts would risk overheating or destabilizing financial conditions. By contrast, other Asian central banks retain some flexibility to adjust policy if global conditions deteriorate or if domestic recoveries falter. The firm’s analysts caution that investors should not treat Asia as a monolith, pointing to the way In South Korea, New Zealand, Australia and Malaysia Nomura now expects policy to stay on hold as a sign that the easy money phase is ending in parts of the region.
Malaysia and Singapore: growth bright spots, inflation edging higher
Within that uneven Asian landscape, Nomura singles out Malaysia and Singapore as two of the more promising growth stories heading into 2026. Its macro team expects both economies to benefit from a combination of strong tech exports and robust domestic demand, helped by their roles in global electronics supply chains and by steady household spending. The recovery in semiconductor cycles, cloud infrastructure build‑outs and regional trade is seen as particularly supportive for these small, open economies, which are well positioned to capture the next wave of AI‑related hardware and services demand.
However, the firm also warns that inflation in Malaysia and Singapore is likely to edge higher as growth strengthens. Even after accounting for adverse base effects in 2026, its economists expect price pressures to remain manageable but to rise above the very low levels seen earlier in the decade. That means central banks in both countries will need to balance support for the recovery with vigilance against overheating, especially if imported inflation from a still‑firm U.S. dollar and higher global commodity prices feeds through. Nomura’s latest Malaysia and Singapore projections capture this duality: they are bright spots for growth, but not immune to the inflationary undertow of a hotter global economy.
Corporate earnings: how 6.2% profit growth fits a hotter cycle
Nomura’s equity strategists see the macro backdrop feeding directly into stronger corporate earnings, particularly in markets leveraged to global trade and technology. In their forecast for fiscal year 2025–26, they project overall profit growth of 6.2% in FY26, supported by a rebound in sales and a sharper improvement in margins. The analysts expect FY26 sales growth of 3.1% year on year, with operating profit growth of 13.7% as companies reap the benefits of earlier cost cutting, automation and AI‑driven productivity gains. That combination of modest top‑line expansion and outsized earnings growth is classic late‑cycle behavior, where pricing power and efficiency do much of the heavy lifting.
Those numbers also illustrate why Nomura is not overly alarmed by the prospect of slightly higher inflation. In a world where nominal GDP is growing faster, companies with strong balance sheets and competitive advantages can often pass on higher costs and even expand margins. The firm’s 6.2% profit growth call assumes that many corporates will manage exactly that, especially in sectors tied to digital infrastructure, industrial automation and high‑end manufacturing. Its detailed FY26 projections, which spell out the expected 3.1% sales and 13.7% operating profit gains, are a reminder that inflation is not uniformly bad for equities, as long as it stays within a range that allows earnings to outpace price increases. That nuance runs through the Our analysts forecast document that underpins the firm’s equity strategy.
Asset allocation: cautious, selective risk in a “Golden Age” narrative
Translating these macro and earnings views into portfolios, Nomura’s investment leadership is advocating a stance that is constructive but not complacent. The firm’s strategists argue that the potential for a productivity‑driven upswing, combined with still‑elevated inflation, favors real assets, quality equities and sectors tied to AI and infrastructure over long‑duration bonds. At the same time, they stress the importance of diversification across regions and asset classes, given the policy splits between the U.S. and Asia and within Asia itself. The goal is to capture upside from the growth story while maintaining resilience if inflation or policy surprises unsettle markets.
That balance is echoed by Tarek Fadlallah CEO of Nomura Asset Management in the Middle East, who recently described his stance on asset allocation as “a little bit cautious” despite the improving macro narrative. His comment reflects a recognition that valuations in some growth sectors are already rich, and that geopolitical and policy risks remain elevated even as the economic data improve. For investors in the region, and globally, his message is that selectivity and risk management matter as much as thematic conviction in AI or infrastructure. The cautious tone from Tarek Fadlallah CEO of Nomura Asset Management sits comfortably alongside the firm’s broader “Golden Age” framing, underscoring that a better growth outlook does not eliminate the need for discipline.
What Nomura’s warning means for investors into 2026
Stepping back, Nomura’s core message is that 2026 is shaping up as a year of renewed growth, but not a return to the low‑inflation, low‑rate world that many investors still use as their mental baseline. The firm expects a clear recovery in the global economy, powered by AI investment, fiscal expansion and a rebound in trade, yet it also sees inflation settling at levels that keep central banks, especially the Federal Reserve, on alert. That combination implies higher nominal returns, but also higher volatility and a greater premium on understanding policy dynamics. For asset allocators, the challenge is to lean into the growth story without assuming that cheap money will automatically follow.
From a broader perspective of Assets allocation, Nomura argues that this environment favors active positioning across geographies and sectors, rather than a simple beta bet on global indices. Its strategists highlight opportunities in regions like Malaysia and Singapore, in U.S. sectors tied to AI and infrastructure, and in companies poised to deliver the 6.2% profit growth they forecast for FY26, while also warning about the drag from sticky 3% U.S. inflation and only limited Fed cuts. The firm’s latest global outlook, framed around the appointment of a new Fed chair and the evolving policy mix under President Trump, reinforces the idea that macro and politics will remain tightly intertwined. For investors looking ahead to 2026, the takeaway from Nomura is clear: growth is coming back, but it will arrive with inflation attached, and portfolios need to be built for both.
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Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
