PGIM Predicts Three Fed Rate Hikes in 2026, Followed by Cuts in 2027 to 3.375%

According to Jin10, PGIM, a U.S. asset management firm, predicts the Federal Reserve will raise rates three times in 2026 to combat overheating and persistent inflation, before reversing course with three rate cuts in 2027 and one additional cut in 2028. The firm projects the fed funds rate will ultimately settle at 3.375%, below current levels and closer to the neutral rate. PGIM cited the U.S. economy's exceptional strength and the Fed's failure to achieve its 2% inflation target for five consecutive years as rationale for the expected rate hikes.
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