Here's When the Federal Reserve Is Expected to Cut Interest Rates in 2026, and What It Means for the Stock Market

Group 1 - The artificial intelligence (AI) boom in 2025 created trillions of dollars in value for tech and tech-adjacent companies, contributing to record highs in the S&P 500 stock market index [1] - Falling interest rates reduce the cost of debt, boost corporate profits, and allow companies to borrow more for growth, which can accelerate returns for investors [2] - The U.S. Federal Reserve is expected to implement more interest rate cuts in 2026 to address rising unemployment, despite elevated inflation [2][9] Group 2 - The Federal Reserve aims to maintain price stability with a target inflation rate of around 2% annually while also striving for full employment without a specific unemployment target [5] - The Consumer Price Index (CPI) remained above the Fed's 2% target throughout 2025, with a November reading showing an annualized inflation rate of 2.7% [6] - A series of weak job reports led to an increase in the unemployment rate to 4.6% in November, the highest in over four years, prompting the Fed to consider further interest rate cuts [8]