The Federal Reserve cut interest rates by a quarter-point on Wednesday.
Capital Economics, among other Wall Street firms, characterized the decision as “hawkish cut,” with the Fed pushing back against more aggressive rate cuts in 2026.
“The new Summary of Economics Projections (SEP) shows that the FOMC still expects one more interest rate cut next year, but the range of projections is unusually wide, even if we exclude Stephen Miran’s extreme views. Either way, we doubt that the Fed will cut again until after a new Chair replaces Jerome Powell in May,” Capital Economics economist Stephen Brown wrote in a note to clients.
The Fed expects one more interest rate cut next year, according to its latest dot plot published along with its Summary of Economic Projections (SEP) on Wednesday.
Beyond Stephen Miran, who called for a 50 basis point cut, there were also two other dissents, with Kansas City Fed president Jeffrey Schmid and Chicago Fed president Austan Goolsbee both preferring no cuts at this meeting.
Brown added: “Unsurprisingly given that division, the statement signaled a pause from here, noting that the FOMC will now consider ‘the extent and timing of additional adjustments to the target range.'”