Federal Reserve Rate Changes Expected to Be Minimal Despite New Chair Appointment

On January 27, CNBC reported that despite the anticipated appointment of a new Federal Reserve Chair by U.S. President Donald Trump, survey respondents expect only minor changes to the federal funds rate over the next two years. According to BlockBeats, the survey results align with federal funds futures market pricing, indicating that neither Wall Street professionals nor economic forecasters believe the incoming Fed Chair will significantly lower overnight rates to the levels desired by the President. The survey suggests an average market expectation of two 25 basis point rate cuts this year, totaling 50 basis points, with no rate cuts anticipated for 2027. The federal funds rate is expected to stabilize at around 3% this year and maintain that level until 2027. President Trump has expressed that U.S. interest rates should be among the lowest globally and has urged the Federal Reserve to reduce rates to 1%. Given the inflation rate of approximately 2%, this demand effectively implies negative real interest rates.