Institution: US Still Has About 3 Interest Rate Cut Room in 2026

December 25th Galaxy Securities noted that amid stronger-than-expected economic growth, CME data shows the probability of a January 2026 rate cut has narrowed compared to prior levels. Following the data release, Kevin Hassett (top candidate for Federal Reserve Chair) stated the growth foundation still stems from falling prices, rising incomes, and improved sentiment. He explicitly noted that if GDP growth holds around 4%, monthly job gains are expected to return to the 100,000-150,000 range. He also bluntly said the Fed is "significantly behind the curve" on rate cuts. Third-quarter economic growth largely reflects fading inventory and trade distortions, which is insufficient to reverse the trend of marginal weakening in job growth. With employment as a key policy consideration and the Fed Chair selection gradually coming into focus, roughly three rate cuts are still expected in 2026. (Source: Jin10)