Budget office expects Federal Reserve to cut rates in 2026

By FATIMA HUSSEIN, Associated Press

WASHINGTON (AP) — The Federal Reserve is expected to cut short-term rates in 2026, with its key interest rate settling at 3.4% towards the end of President Donald Trump’s term in office in 2028, according to a new report released Thursday by the nonpartisan Congressional Budget Office.

Despite the Fed’s cuts, however, the budget office projects the yield on 10-year Treasury notes to increase gradually, from 4.1% in the fourth quarter of 2025 to...