Despite the change in Federal Reserve Chair, the market remains unconvinced of a sharp interest rate cut next year

December 9th Reuters columnist and financial journalist Jamie McGeever notes that while Federal Reserve Chair Jerome Powell’s eight-year term wraps up next May, markets broadly expect Trump’s chief economic advisor Kevin Hassett to take his place. But market pricing clearly signals traders don’t believe a Hassett-led Fed will ease monetary policy significantly as Trump has hinted. In fact, interest rate futures show just 75 basis points of easing is expected by the end of next year — equal to three 25-basis-point rate cuts. Most likely, two of those cuts will come before Powell departs, leaving only one after the new chair takes office in the second half of 2026. The key driver? During the Fed chair transition, inflation is still projected to hover around 3%. By the time the new chair assumes office, real interest rates may be near zero — meaning monetary policy is already very accommodative.