Economist forecast more easing – but not a return to pandemic borrowing costs
Federal Reserve officials are expected to cut rates again next week, extending an easing cycle that began in September, as policymakers try to head off a sharper slowdown in the United States labor market.
Economists surveyed by Bloomberg said the Fed’s focus has shifted from inflation to rising risks around employment, even as price pressures from tariffs linger.
The median forecaster in that survey projects two further quarter-point cuts in 2026, starting in March, on top of this December move. Those projections imply a shallow cutting path rather than a rapid pivot back to ultra-cheap money, with most respondents still seeing only two cuts next year.
“Fed doves appear to slightly be in primacy over the hawks,” said Dennis Shen, economist at Scope Ratings.
“If the Federal Reserve does ease again, we would expect Powell to emphasize a temporary pause afterward, awaiting further economic signals.”
Labor data has done little to clarify the picture. Large employers such as Verizon and Amazon has announced job cuts, yet weekly unemployment claims remain subdued.
Inflation readings are also constrained by a government data blackout, with the last official consumer price index print showing prices running at 3% in September.
Kansas City Fed president Jeff Schmid is expected to dissent again after opposing the October cut, while St Louis Fed chief Alberto Musalem and governor Stephen Miran could also break with the majority over concerns about persistent inflation and the size of the move.
Mortgage market braces for limited benefit
For mortgage professionals, the path of long-term yields – not just Fed policy – remains decisive.
Redfin and other housing analysts expect 30-year mortgage rates to stay in the low‑6% range in 2026, even with further Fed cuts, warning that borrowing costs might only “ease slightly” rather than tumble.
Realtor.com also projected mortgage rates would stay close to current levels next year even if the Fed continued to ease.
“While this may be disappointing to buyers hoping for even lower rates, mortgage rates are expected to be low enough to offset price gains, causing the monthly cost of buying a home to drop in 2026 for the first time since 2020 even as home prices rise,” said Realtor.com chief economist Danielle Hale.
“On balance, the data that are currently available are likely sufficient for a majority of the committee to support a rate cut, but I expect the vote will again highlight the wide variety of perspectives on the appropriate policy decision,” Hale said.
Another Fed rate cut is widely anticipated, yet mortgage rates near one-year lows suggest the move is already priced in.https://t.co/E5x7VFQR8B
— Mortgage Professional America Magazine (@MPAMagazineUS) December 4, 2025
Fed leadership question clouds long-term outlook
Monetary policy beyond 2026 could hinge on who follows Jerome Powell when his term expires in May.
Many economists in the Bloomberg survey see National Economic Council director Kevin Hassett as the administration’s likeliest pick, reflecting political calculations, even as most respondents judge Fed governor Christopher Waller the stronger choice on policy grounds.
“Waller has institutional knowledge and experience as a Fed governor. It is also likely that he has better working relationships with other FOMC members,” said Thomas Simons, senior economist at Jefferies.
“However, we have no reason to think that Hassett is a bad choice.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
