Federal Reserve live coverage: Fed set to cut rates for third time this year, 2026 forecast in focus

The consensus around the Federal Reserve’s policy move on Wednesday has firmed around a 25 basis point rate cut — even if the decision will be a close one, as Yahoo Finance’s Jennifer Schonberger details.

Traders are pricing in an 89% chance that the Fed lowers interest rates by 25 basis points at the conclusion of the FOMC meeting on Wednesday, according to CMEGroup’s FedWatch.

But looking ahead to the January meeting and 2026 broadly, the path is even less certain.

One widely held view is that the Fed will move forward with a “hawkish cut” on Wednesday, in which the central bank lowers rates but hints at a pause in January, JPMorgan’s Michael Feroli wrote in a Dec. 5 note. Traders have put a 23% probability that the Federal Reserve will continue cutting rates at its Jan. 27-28 meeting.

“At the press conference, we expect that Powell will stress that with policy rates close to neutral, the time for risk management cuts is past and that further cuts would only come with a material deterioration in the labor market,” Feroli wrote.

“We don’t expect him to comment directly on January,” Feroli added, “but instead to highlight that there is a lot of data to be released between now and the January meeting and that will guide their decision.”

For the remainder of the year, views range from the Fed cutting rates at its next few policy meetings due to a deterioration in the labor market to additional rate cuts in the summer due to a change in Fed leadership.

Read more about 2026 predictions for Federal Reserve policy here.