Wells Fargo: The Federal Reserve is expected to cut interest rates five times by mid-2026
2025-09-10 11:07:47
Wells Fargo expects the Federal Reserve to cut interest rates five times by mid-2026, each by 25 basis points. The bank expects consecutive rate cuts at the next three meetings, bringing rates down to 3.50% - 3.75% by year-end, followed by two more cuts in March and June 2026, bringing the rate band down to 3.00% - 3.25%. The outlook reflects a weak labor market, with average job gains of just 29,000 in August and the unemployment rate rising to 4.3%. Inflation remains a challenge, with core PCE up 2.9% year-over-year, but Wells Fargo noted that inflation expectations remain stable. The bank raised the probability of a U.S. recession next year to 35 percent, but predicted stronger growth in coming years, with GDP growth expected to reach 2.4 percent in 2026 as fiscal stimulus and interest rate cuts take effect.
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