The Fed expects to initiate interest rate cuts amid economic concerns

Francois Rimeu, strategist at Credit Mutuel Asset Management, expects the Federal Reserve to start a new cycle of interest rate cuts this week, which may continue until 2027. The default is that weak economic activity and labor markets force the Fed to adopt a larger monetary easing policy and predict that by 2027, terminal interest rates will drop to 3.1%, close to the long-term interest rate of 3%. The agency predicts the Fed will cut interest rates by 25 basis points this week, and is expected to cut interest rates again later this year, with two more cuts in 2026. Interest rates may stabilize in 2028. Data from the London Stock Exchange Group shows that the U.S. currency market is currently expected to cut interest rates by the end of next year.