On January 27, CNBC reported that although a new Federal Reserve chairman appointed by Trump is expected in the coming months, respondents in a CNBC survey only expect a slight change in the federal funds rate over the next two years.
The survey results are largely consistent with pricing in the federal funds futures market, indicating that neither Wall Street analysts nor economists believe the next Federal Reserve chairman will drastically lower the overnight rate to the low level desired by the president. The survey shows that the market's average expectation is for two more rate cuts of 25 basis points each this year, totaling 50 basis points, while no rate cuts are anticipated for 2027. The federal funds rate is expected to remain stable at around 3% this year and maintain this level until 2027.
Trump has stated that U.S. interest rates should be among the lowest in the world and has demanded that the Federal Reserve lower rates to 1%. With inflation at around 2%, this demand effectively translates to negative real interest rates.
