Fed official forecasts bold path for interest rates, GDP in 2026

Core Viewpoint - The U.S. economy is expected to show resilience and potential growth in 2026, despite uncertainties in the labor market and inflation [3][4]. Economic Outlook - New York Fed President John C. Williams anticipates fewer economic fluctuations in the upcoming year, emphasizing the balance between price stability and low unemployment [4][5]. - The Federal Open Market Committee (FOMC) recently cut the benchmark Federal Funds Rate to a target range of approximately 3.50%–3.75%, marking the third quarter-percentage-point cut of the year [6][7]. Labor Market Insights - The labor market is showing signs of cooling, with job growth described as anemic and the unemployment rate steadily increasing [11]. - Williams noted that labor demand is softening more than supply, raising concerns about the overall health of the job market [11]. Monetary Policy Considerations - The FOMC's cautious approach to monetary policy has been influenced by tariff inflation and trade policy, leading to a "wait-and-see" strategy before implementing rate cuts [12]. - The recent interest rate cuts are aimed at supporting hiring while managing inflation risks, highlighting the delicate balance policymakers must maintain [10].