A December 10 Fed rate cut is increasingly expected, with analysis from Oliver Faizallah, Head of Fixed Income Research at Charles Stanley, highlighting how soft-landing economic data, dovish Fed signals and evolving leadership expectations are shaping the path for US monetary policy into 2026.
Oliver Faizallah, Head of Fixed Income Research at Charles Stanley, part of Raymond James Wealth Management:
“Recent data continues to support the narrative of a soft landing in the US economy – a delicate balance between slowing growth alongside resilience in the US labour market. This backdrop has given the US central bank the Federal Reserve room to ease policy, with markets now fully pricing in a 25bps rate cut at next week’s meeting, a sharp shift from just 30% odds a month ago. The move reflects both supportive economic indicators, dovish Fed commentary, and speculation around future leadership.
“Markets have taken a speech from Fed president John Williams last month – where he suggested ‘further adjustment in the near term’ for interest rates – as a signal that we will see at least another cut soon, likely at the next meeting of the Federal Open Market Committee on December 10. Whitehouse economic adviser Kevin Hassett, widely seen as a frontrunner to succeed Jerome Powell as Fed chair in 2026, has reinforced expectations of a more dovish stance – a prospect markets welcomed with a rally in Treasuries. Last week he expressed a desire to cut rates ‘well below 3%’ if nominated. On Sunday he confirmed he would be ‘happy to serve’. Meanwhile, president Donald Trump said there would be an announcement soon.”
