“There are two kinds of interest rate forecasters: those who don’t know and those who don’t know they don’t know.” John Kenneth Galbraith
I am firmly in the camp of those who don’t know but the futures markets give us the ability to examine the consensus view. The following graphic tells us what market participants expect in terms of the number and size of cuts in the FED Funds Rate between now and mid-2026.
Note that the market expects a total of eight cuts reducing the rate from just under 5% to 2.8%. This is a fairly rosy scenario that could lead to disappointment should the FED elect a more cautious trajectory.