Federal Reserve delivers third straight rate cut

"Inflation reached its highest level since the start of the year in September, rising 3% year over year compared to 2.9% in August, according to the U.S. Bureau of Labor Statistics. Meanwhile, the September jobs report beat estimates by creating 119,000 jobs, but the unemployment rate ticked up to 4.4% Jeffrey Ruben, president of home lending at WSFS Bank, said the Fed has consistently emphasized that U.S. economic growth remains resilient."

"We see good growth this year and into next year as well, Ruben said. Ruben added that while the labor market had looked unbelievably strong until recently, inflation has been the persistent challenge. The Fed now appears to be prioritizing labor market stability in hopes of keeping the labor market strong and maybe fending off some of the labor losses that are being perceived in the economy, he said."

"Bank of America analysts said this week that the base case for 2026 is steady rates, with the 10-year Treasury yield holding around 4.25% by year's end, along with U.S. gross domestic product growth of 2.4%. But they flagged a potential wildcard: a more dovish Fed leadership. President Donald Trump is searching for a new Fed Chair to replace Jerome Powell, and Kevin Hassett, director of the White House National Economic Council, is reportedly the leading candidate."

Inflation rose to 3.0% year over year in September, up from 2.9% in August. The September jobs report added 119,000 positions, while the unemployment rate increased to 4.4%. The Federal Reserve continues to emphasize resilient U.S. economic growth and expects continued good growth through next year. The labor market had appeared very strong until recently, but inflation remains a persistent challenge and the Fed is prioritizing labor market stability. Missing October and November jobs data leaves additional uncertainty. Bank of America projects steady rates for 2026 with a 10-year Treasury near 4.25% and GDP growth of 2.4%, though a dovish Fed chair could lower rates and yields.

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