Fed New Interest Rates 2026: The Federal Reserve is getting ready to announce its last interest rate decision of 2025 on Wednesday. The central bank is ending a very confusing year for the U.S. economy, where workers faced new job problems and prices kept rising because of tariff pressure. Many families say basic needs like food and health care feel more expensive than before, and this has made the year even harder.
The Fed also has to make this decision without two important government numbers. The November hiring data and the newest inflation report got delayed by the shutdown, so the central bank cannot use them this time. These numbers usually help the Fed follow its “dual mandate,” which means it must keep inflation low while also keeping unemployment low.
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Economists Expect another Cut despite Unclear Data
Many experts still think the Fed will cut rates again on December 10. CME FedWatch shows an 88% chance that the Fed will go for another 0.25% cut, which would push the federal funds rate down to a range of 3.75% to 4%. This would be the third cut in a row, reported CBS News.
If the cut happens, some people may feel a little relief because loan costs might dip. Credit card users and people with home equity lines might see slightly smaller payments at a time when living costs still feel heavy.
Bankrate analyst Stephen Kates said, “As discussions about affordability take center stage across the United States, the Federal Reserve appears poised to cut interest rates a third time.” He also said the Fed is working with “limited visibility” because it cannot see the latest inflation number.
Lower rates could help people spend more, but they also carry a danger. Cheaper loans can push prices up again if people and businesses start spending too fast.
President Donald Trump and others in his team have complained all year that Fed Chair Jerome Powell acted too slowly. Powell earlier said a cut was not a “foregone conclusion,” but many signals now show pressure building on the Fed.
A Split Panel
Some members of the rate-setting group, the Federal Open Market Committee, do not agree on the best path. New York Fed president John Williams said the weak job market matters more than inflation right now. But the committee is not fully united, and outside experts see the divide clearly.
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Michael Pearce from Oxford Economics wrote, “It’s difficult to recall a time when the Federal Open Market Committee has been so evenly divided about the need for additional rate cuts than the upcoming December meeting.” He added that they still expect a quarter-point cut.
Now many people want to know if the Fed will hint at more cuts in 2026. A FactSet poll shows a 62% chance that the Fed will keep rates unchanged in the next meeting in late January. Economists think more cuts might come later in 2026, maybe in March, because inflation still sits above the Fed’s 2% goal.
Jobs may shape next year’s decisions more than anything else. Data shows employers cut over 1.1 million jobs through November, which is the highest since 2020 and 54% higher than last year.
