Kevin Hassett, the Chairman of the White House National Economic Council (NEC), has recently emerged as one of the leading candidates to head the next US Federal Reserve (Fed).
At this point, while Donald Trump is expected to announce his FED presidential candidate at the beginning of 2026, markets are focused on the FED’s December interest rate decision.
As the Fed prepares to announce its December interest rate decision without significant data, a 25 basis point cut is being priced into the markets.
According to CME FEDWatchToll data, the Fed is priced in at 87% for a 25 basis point rate cut in December, while leaving rates unchanged is priced in at just 13%.
At this point, Delphi Digital predicted in its latest post that the Fed will make another 25 basis point cut in December, bringing the federal funds rate to around 3.50-3.75%.
Analysts at Delphi Digital predict that the forward curve will see at least three more rate cuts in 2026, with interest rates falling below 3% by the end of the year.
Analysts also stated that the end of the QT on December 1, the decline in the NPL and the full depletion of the RRP, constitute the first net positive liquidity environment since the beginning of 2022, thus changing the policy in 2026 from negative to positive.
The Fed’s interest rate path for next year is the clearest it has seen in years. Another 25 basis point cut is expected in December 2025, which would push the federal funds rate to around 3.5-3.75%. The forward curve projects at least three more rate cuts in 2026, which, if the path continues, would cause the interest rate to fall below 3% by the end of the year.
But interest rate cuts are only part of the picture. The QT period ends on December 1st. The NPL will be reduced rather than replenished. The RRP has been fully depleted. All of this combined creates the first net positive liquidity environment since early 2022.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/analysis-firm-announces-fed-interest-rate-forecast-for-december-and-2026-the-clearest-year/
