CNBC Survey: 93% of respondents believe that the Federal Reserve will cut interest rates by 25 basis points this month

Respondents to CNBC's December Federal Reserve survey firmly believe that the Fed will cut interest rates this week, but they are less certain about whether it should. 93% of people think the Fed will cut by 25 basis points. But only 63% of people think this is what the Fed should do. Respondents expect two more rate cuts by 2025, each by 25 basis points, fewer than the three predicted in the last survey. By this time next year, fund rates will drop to 3.8%, and by the end of 2026, fund rates will drop to 3.4%, slightly higher than average neutral interest rates. A huge unknown is fiscal policy under a new administration.

The survey shows that prospects for President-elect Trump's tariffs and potential deportations have curbed some upward predictions for the economy. Economist Robert Fry said he has never been so uncertain about inflation prospects before: "Trump has given us a combination of raising inflation (tariffs, tax cuts) and lowering inflation (deregulation, spending cuts). Who knows what we'll end up with?"