Why this strategist still thinks there will be 4 Fed rate cuts in 2026

• Fed officials Beth Hammack and Lorie Logan advocate for holding interest rates steady, citing concerns about persistent inflation and the current policy stance being appropriate.
• Danielle DiMartino Booth points to cooling labor market data (ADP, Challenger, ECI at lowest rate since 2021) and disinflation in services and rents (Trueflation at 0.74%) as evidence of weakening demand.
• DiMartino Booth's base case is four Fed rate cuts in 2026, suggesting the Fed may need to play catch-up if it fails to ease in the face of obvious labor market weakening.
• The US consumer is hurting outside the top 10%, supported by softer-than-estimated retail sales and delinquency data.

Fed officials express caution on rate cuts, citing persistent inflation risks and the need for decisive evidence of price drops. Conversely, a strategist highlights cooling labor market data and disinflation in services and rents, arguing for the necessity of rate cuts, with a base case of four cuts in 2026. The discussion underscores differing views on the economy's health and future monetary policy.