Federal Reserve official Miran forecasts a cumulative 150 basis points in interest rate reductions by the end of 2026, reflecting a shift toward accommodative policy as inflation pressures ease. The projection comes amid evolving economic data and expectations of slower growth.
- Miran projects 1.5 percentage points (150 basis points) of rate cuts by end of 2026.
- Rate reductions expected to begin in late 2025, with gradual implementation through 2026.
- 10-year Treasury yield declined 35 basis points following the projection.
- Markets price in 70% chance of at least one cut in 2025, 120 bps of easing by 2026.
- Housing, utilities, and long-duration equities showed positive performance.
- Rate cuts may stimulate borrowing and investment but reduce bank net interest margins.
Federal Reserve policymaker Miran has outlined a projected path of 1.5 percentage points in interest rate cuts by the conclusion of 2026, signaling a notable pivot from current policy rates. This forecast suggests a gradual easing cycle as inflation shows sustained progress toward the Fed’s 2% target, with underlying economic indicators supporting a reassessment of monetary tightening. Miran’s stance aligns with a growing consensus among officials that inflation risks have diminished, though labor market resilience remains a monitoring point. The anticipated 150 basis point reduction would be distributed across multiple meetings, likely beginning in the latter half of 2025 and continuing through 2026. This projection implies that the federal funds rate could range from approximately 4.25% to 4.5% at its peak in 2024 to near 3.0% by late 2026, assuming no major economic disruptions. The timing and pace of cuts will depend on incoming data, particularly inflation readings, wage growth, and consumer spending trends. Financial markets have responded to the forecast with moves in Treasury yields and equities. The 10-year Treasury note yield has declined by 35 basis points since the announcement, reflecting expectations of lower long-term rates. Bond markets are pricing in a 70% probability of at least one rate cut in the second half of 2025, with a cumulative 120 basis points of easing priced in by the end of 2026. Sectors sensitive to interest rates—such as housing, utilities, and long-duration equities—have seen gains in recent trading sessions. The projection affects borrowers, investors, and financial institutions. Lower rates could stimulate mortgage refinancing and business investment, while also pressuring banks’ net interest margins. Federal Reserve Chair Jerome Powell has emphasized that decisions will remain data-dependent, and Miran’s outlook does not imply a formal shift in policy stance but rather a forward-looking assessment of economic conditions.