Moody's: Fed May Actively Cut Rates Three Times in First Half of 2026

Odaily News Moody's Analytics Chief Economist Mark Zandi believes that a weak labor market, inflation uncertainty, and political pressure will prompt the Federal Reserve to aggressively cut interest rates in early 2026. Although both the market and Fed officials anticipate only moderate easing next year, Zandi expects the Fed to implement three rate cuts in the first half of the year, each by 25 basis points. "The impetus for further monetary policy easing will be a still-weak job market, especially in early 2026. Businesses will need more time to gain confidence that evolving trade and immigration policies, along with other threats, won't catch them off guard before they resume hiring," he added. "Until then, job growth will be insufficient to prevent the unemployment rate from rising further. As long as the unemployment rate keeps climbing, the Fed will cut rates." Zandi's forecast is at least more aggressive than the expectations of both the market and the Fed, which point to a slower pace of rate cuts.