Analysis of Ben Emons' Forecast for Gradual Fed Rate Cuts in 2026

On December 26, 2025, Ben Emons from Fed Watch Advisors discussed the Fed’s 2026 policy path on CNBC’s “Fast Money,” forecasting gradual interest rate cuts [1]. To contextualize this, the Fed reduced its federal funds rate three times in 2025 (25bps each in September, October, December), ending the year at 3.50%–3.75% [0]. The December 2025 FOMC dot plot, reflecting Fed officials’ projections, shows a median expectation of only one additional 25bps cut in 2026. In contrast, market pricing via the CME FedWatch Tool and forecasts from brokerages like Citi and Morgan Stanley anticipate two 25bps cuts (50bps total) [0]. Emons’ use of “gradual” likely refers to a pace avoiding both aggressive easing (which could reignite inflation) and prolonged policy stability (which might strain the labor market). This aligns with the Fed’s recent incremental adjustment track record, driven by factors like inflation projected to slow to ~2.4% by end-2026 (slightly above its 2% target) and solid GDP growth (~2.3% in 2026) [0].

1. The split between the Fed’s conservative projection (one cut) and market expectations (two cuts) creates uncertainty, but Emons’ gradual forecast offers a middle-ground perspective that may resonate with stability-seeking investors.
2. A gradual easing cycle typically supports bond prices by reducing yields and moderates stock market volatility, signaling the Fed’s confidence in the economy’s resilience [0].
3. Emons’ forecast reinforces the Fed’s data-dependent approach, where rate decisions will hinge on continued progress toward the 2% inflation target and labor market health.

• Risks
  : Unexpected inflation rebounds could prompt the Fed to pause or reverse cuts, potentially leading to market corrections. Faster-than-expected cuts might rekindle inflation pressures, eroding purchasing power and forcing the Fed to tighten again [0].
• Opportunities
  : A gradual easing path could sustain bull market momentum by supporting corporate borrowing costs and consumer spending. Bond investors may benefit from lower yields, while equity markets could avoid volatility from aggressive policy shifts [0].

• Event Source
  : CNBC’s “Fast Money” segment (December 26, 2025) featuring Ben Emons [1].
• 2025 Fed Rate Actions
  : Three 25bps cuts, ending at 3.50%–3.75% [0].
• Projections
  : Fed dot plot (1 cut 2026), market (2 cuts) [0].
• Emons’ Stance
  : Gradual cuts balance inflation and labor market risks [1].
• Information Gaps
  : Full transcript of Emons’ comments and detailed reasoning are unavailable due to crawl limitations.