The Cut, The Dots, and the Chair: Why 2026 Looks Different

The Federal Reserve lowered its benchmark interest rate by 25 basis points today, the third cut of the year and an outcome that carried over a 90 percent implied probability (per Fed Funds Futures) this morning. With the move widely expected, the real debate centered on whether investors would view today’s action as a hawkish cut, meaning a reduction in rates today paired with mixed signals about further easing soon. 

Within the committee, the divide remains familiar. The more dovish committee members favor cutting now to mitigate the risk of future weakness in the labor market while the hawkish side sees further easing as a risk to improving, but still-elevated inflation. The latest reading (September 2025) of the Fed’s preferred gauge of inflation came in below Street expectations, but still above the Fed’s target of 2%.

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