Mark Zandi predicts three Fed rate cuts before June as job market weakens

Mark Zandi, the chief economist at Moody’s Analytics, has predicted that the Federal Reserve will go for three interest rate cuts before June, each by 0.25 percentage points.

According to Mark, his prediction/warning is tied to what he sees as continued job market weakness, shaky inflation signals, and direct political pressure.

Unlike Wall Street and Fed officials, who expect a slow pace, Mark believes the central bank will be forced to act faster.“Behind the decision to ease monetary policy further will be the still flagging job market, particularly in the early part of 2026,” he wrote.

Companies, Mark says, won’t rush to hire. They’re still spooked by recent changes in trade and immigration policy and want stability before adding to payrolls.

Unemployment rise and weak hiring pace trigger early cuts

According to Mark, businesses are dragging their feet on hiring, which means job growth will stay soft.That keeps unemployment climbing, and that puts pressure on the Fed.

“Until then, job growth will remain insufficient to forestall further increases in unemployment, and as long as unemployment is on the rise, the Fed will cut rates,” he wrote.

This view is far ahead of market expectations, which are only pricing in two cuts, one possibly in April, the second likely around September. That’s according to CME FedWatch data, which tracks rate predictions from futures traders. Mark isn’t buying that timeline. He sees rate cuts coming much earlier and more frequently.

Fed officials themselves are even more cautious. Their latest dot plot, the grid of where each policymaker sees rates heading, only shows one rate cut for all of 2026. And even that one wasn’t a strong consensus.

December’s FOMC minutes revealed that the cut was a close call. Members admitted they might ease more later, but not by much. That’s not fast enough for Mark, who sees too many warning signs flashing red.

Trump’s control of Fed appointments adds more pressure

One reason Mark sees urgency is politics. President Donald Trump, back in the White House, is already reshaping the Federal Reserve’s leadership.

Right now, three of the seven sitting Fed governors (Christopher Waller, Michelle Bowman, and Stephen Miran) are Trump appointees. With Miran’s term ending in January, Trump will soon get to pick another.

It doesn’t stop there. Jerome Powell’s time as Fed chair ends in May, even though his governor term runs through 2028. Trump is likely to pick someone who shares his low-rate agenda. He’s also reportedly trying to oust Governor Lisa Cook, although courts are blocking that attempt, for now.

Mark warns that this lineup gives Trump major influence. “Trump will also pressure for lower interest rates. Federal Reserve independence will steadily erode as the president appoints more members to the Federal Open Market Committee, including the Fed chair in May,” he said.

With midterm elections coming, the push for lower rates could get louder. Trump wants to show economic growth, and that means more pressure on the Fed. The next FOMC meeting is set for Jan. 27–28, but traders only see a 13.8% chance of a cut then, based on CME data. That may change fast if Mark is right.

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