On December 26, Moody's chief economist Mark Zandi said the Federal Reserve may cut interest rates multiple times in 2026, not because of economic prosperity, but because he feels the economy has reached a delicate balance.
In Zandi's view, this unusual combination points to a gradual, cautious interest rate path in the future, rather than an aggressive rate-cutting cycle.
Inflation has also complicated the prospect of a Federal Reserve rate cut. Zandi believes that CPI is closer to 3% than the Fed's target, affecting the speed at which policymakers act. Official data supports his argument: the US CPI is projected to rise 2.7% year-on-year in November 2025 (core CPI at 2.6%), still above the Fed's 2% target. He notes, "Inflation remains well above what the Fed would like, and while upside surprises are still possible, the risks are two-way." (Jinshi)
