2026 US Interest Rate Outlook: A Triangular Game Between Market Expectations, Political Variables, and Economic Data

Original title: What To Expect For Interest Rates In 2026

Original author: Simon Moore, Forbes

Original translation by: Peggy, BlockBeats

Editor's Note: With the market betting on a convergence of "a new Federal Reserve Chairman + a new round of interest rate cuts" in 2026, the path of US interest rates has once again become the main variable in global asset pricing.

CME futures indicate that the federal funds rate may fall to around 3% in 2026, down from the current 3.75%–4% range, with the main cuts likely concentrated in the first half of the year. However, with inflation not yet fully back to target and signs of weakening employment, the policy outlook remains uncertain. Although the Trump administration is expected to appoint a new chairman with a more dovish stance, the FOMC's operating mechanism dictates that the policy tone will still be driven by economic data.

This article outlines the key interest rate decision timeline for 2026, the expected range of interest rate cuts, and policy maneuvering, providing readers with a clear framework for understanding the direction of US interest rates.

The following is the original text:

Following the regular Federal Open Market Committee (FOMC) meeting in Washington, D.C., Federal Reserve Chairman Jerome Powell answered reporters' questions at a press conference. Despite pressure from President Donald Trump for interest rate cuts, the U.S. central bank kept the federal funds rate unchanged at 4.25%–4.5%.

Based on the pricing of interest rate futures using the CME FedWatch tool, the market generally expects a short-term interest rate decline cycle in 2026 under the backdrop of a "new Federal Reserve Chairman," with the Federal Open Market Committee (FOMC) likely to focus on the path of interest rate cuts at all eight of its regular meetings throughout the year.

Prior to this, the FOMC will still hold its last policy meeting of the year on December 10, 2025. The market believes that there is a possibility of a slight rate cut at this meeting, but the probability of keeping the rate unchanged should not be ignored.

Interest Rate Path in 2026

Based on current pricing, the federal funds rate is projected to fall to around 3% by December 2026, down from the current range of 3.75%–4%.

However, the interest rate outlook remains highly uncertain: in more extreme market estimates, interest rates could fall as low as 2% or remain at 4%.

If the FOMC ultimately initiates rate cuts, the market anticipates that the main cuts will likely occur in the first half of 2026. In contrast, Fed officials themselves are more cautious in their 2026 interest rate forecasts, with most still predicting rates will remain above 3%. However, these forecasts were released in September and will be updated again in December.

2026 FOMC Meeting Schedule

While the Federal Reserve can adjust interest rates at any time in case of an economic emergency, it typically follows a schedule of eight regular meetings in a normal year.

The 2026 interest rate meeting will be held on the following dates: January 28, March 18, April 28, June 17, July 29, September 16, October 28 and December 9.

Starting in March, the FOMC will update the Summary of Economic Projections (SEP) at every other meeting.

The new chairman may push for lower interest rates.

President Trump is expected to nominate a new Federal Reserve chair in 2026 who is more supportive of a "rate-cutting approach." Prediction markets (such as Kalshi) currently consider Kevin Hassett to be the most likely candidate.

This means that interest rate policy could receive additional impetus in 2026. For example, Stephen Miran, whom Trump appointed in 2025, has repeatedly voted in favor of a more aggressive stance on interest rate cuts.

However, apart from the choice of chair, the voting structure of the FOMC will remain largely unchanged, which means that monetary policy will not undergo a drastic shift due to the new chair.

Economic data remains the core variable.

Ultimately, the Federal Reserve's decisions will still be driven by economic data.

Currently, inflation is slightly above the 2% target, but there are no signs of it getting out of control; the unemployment rate has risen, but it is not high enough to trigger alarms.

In this environment, the FOMC is likely to lower interest rates at a moderate pace. If the unemployment rate worsens significantly, the pace of rate cuts may be forced to increase; conversely, if inflation unexpectedly rebounds, the Fed may slow the adjustment. However, the latter scenario is currently less likely.

The most closely watched indicator right now is the employment data. Some officials believe the labor market is slowing down, which could drag down the overall economy, and that interest rates should be lowered sooner rather than later; others believe that the softening of employment does not pose a real risk.

Employment data will continue to reveal in 2026 which side's assessment is closer to reality.

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