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According to a recent CNBC poll, despite the expected appointment of a new Fed chairman by US President Donald Trump in the coming months, no significant change is anticipated in market interest rate expectations.
Most respondents expect only limited easing of the federal funds rate over the next two years.
According to a CNBC survey, the average market expectation is for two 25 basis point interest rate cuts this year. This points to a total of 50 basis points of cuts by 2026. However, no rate cuts are expected for 2027. The survey predicts that the federal funds rate will stabilize at around 3% and remain at that level until 2027.
The survey results largely coincide with pricing in the federal funds futures markets. This indicates that neither Wall Street analysts nor economists expect a sharp and rapid drop in the policy interest rate following the new Fed Chairman’s assumption of office. Market participants agree that the change in leadership will not lead to a radical shift in monetary policy.
On the other hand, President Trump argues that US interest rates should be among the lowest in the world, continuing his call to lower the policy rate to 1%. In the current environment, where inflation is hovering around 2%, this demand effectively means negative real interest rates. However, a CNBC survey shows that markets have not yet priced in these policy expectations and are embracing a more cautious interest rate path.
*This is not investment advice.