Mark Zandi, chief economist at Moody's Analytics, believes that weak labor markets, inflationary uncertainty, and political pressure will push the Federal Reserve to actively cut interest rates in early 2026. Although both the market and Fed officials expect only moderate easing next year, Zandi expects the Federal Reserve to cut interest rates three times in the first half of the year, by 25 basis points each time. “Behind the further easing of monetary policy will be the still weak job market, especially in early 2026. Businesses will need more time to be confident that changing trade and immigration policies and other threats won't catch them off guard before they resume hiring.” He added: “Until then, employment growth will not be enough to stop the unemployment rate from rising further. As long as the unemployment rate continues to rise, the Federal Reserve will cut interest rates.” Zandi's predictions are at least more aggressive than those of the market and the Federal Reserve, both of which point to a slower pace of interest rate cuts.

Mark Zandi, chief economist at Moody's Analytics, believes that weak labor markets, inflationary uncertainty, and political pressure will push the Federal Reserve to actively cut interest rates in early 2026. Although both the market and Fed officials expect only moderate easing next year, Zandi expects the Federal Reserve to cut interest rates three times in the first half of the year, by 25 basis points each time. “Behind the further easing of monetary policy will be the still weak job market, especially in early 2026. Businesses will need more time to be confident that changing trade and immigration policies and other threats won't catch them off guard before they resume hiring.” He added: “Until then, employment growth will not be enough to stop the unemployment rate from rising further. As long as the unemployment rate continues to rise, the Federal Reserve will cut interest rates.” Zandi's predictions are at least more aggressive than those of the market and the Federal Reserve, both of which point to a slower pace of interest rate cuts.