BREAKING: Fed Expected to Cut Rates Twice More in 2025 — 2026 Outlook Still Unclear 🔍

BENGALURU, Oct 21 (Reuters) — The U.S. Federal Reserve 🇺🇸 is widely expected to deliver two more interest rate cuts 💸 this year — one next week and another in December — as policymakers turn their attention to supporting a slowing job market .

According to a Reuters poll of 117 economists , nearly all respondents (115) expect the Fed to trim its benchmark rate by 25 basis points at the October 29 meeting, bringing it down to 3.75%–4.00%. Two forecasters anticipate a deeper 50 bps cut by December.

A majority of 71% also expect another quarter-point cut at the December meeting 📆, signaling growing conviction that the central bank is prioritizing growth stability 📉➡️📈 over persistent inflation risks .

The new forecast marks a clear shift from last month, when economists predicted just one more rate cut for 2025.

💹 Markets React:

Traders have already priced in two full rate reductions this year, with futures contracts reflecting rising confidence in continued monetary easing.

Fed Chair Jerome Powell 🧑‍💼 and other FOMC members have reiterated their focus on the labor market, even as inflation remains elevated. However, the ongoing U.S. government shutdown , now in its third week, has delayed key economic data, making the policy outlook murkier.

📉 Job & Inflation Outlook:

Private data show only modest hiring and layoffs, with the unemployment rate expected to stay near 4.3% through 2027.

Inflation, measured by the Fed’s preferred PCE index, is projected to remain above the 2% target 🎯 for the next several years. Delayed government data due October 24 are expected to show headline inflation rising to 3.1% in September from 2.9% in August.

🔮 Uncertain 2026 Path:

Economists remain deeply divided about where rates will stand by end-2026, with forecasts ranging between 2.25%–2.50% and 3.75%–4.00%.

That uncertainty is heightened by speculation over who will succeed Powell, whose term ends in May 2026 ⏳#FedPaymentsInnovation