📌 Headline
Fed 2026: A Year of Transition
📝 Main Content
The Federal Reserve enters 2026 with interest rates at 3.5%-3.75% following three consecutive rate cuts in 2025, totaling 175 basis points since September 2024.
This year presents a significant event to watch: the tenure of Fed Chair Jerome Powell will conclude in May 2026, which means a new chair will be appointed.
Regarding policy direction, the Dot Plot from the December 2025 meeting indicates that the Fed anticipates only one rate cut in 2026, while markets expect two cuts, potentially occurring in April and September.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has expressed the view that the Fed may be approaching the “Neutral Rate” level, which refers to an interest rate level that neither excessively stimulates nor slows the economy.
💡 Insight
The “Neutral Rate” is a crucial concept for understanding Fed policy. It is generally estimated to be approximately 2.5%-3% in the long term. With current interest rates approaching this level, it suggests that the Fed may slow down the pace of rate reductions.
🔚 Closing
The year 2026 will be a noteworthy period for U.S. monetary policy, both in terms of new leadership and the direction of interest rates. 🏛️
