Mark Zandi: The Fed should not raise interest rates

• Inflation has peaked, assuming stable oil prices and fading effects of policy-related factors like tariffs and geopolitical events.
• Inflation expectations, particularly in the bond market, remain well-anchored, consistent with the Fed's target.
• The labor market is showing signs of weakness, with wage growth decelerating and falling below the rate of inflation, indicating a cooling labor market.
• Business spending (capex) is a source of growth, but much of it is imported, limiting direct domestic job creation, though it could boost long-term productivity.

Mark Zandi, Chief Economist at Moody's Analytics, argues that the Federal Reserve should not and will not raise interest rates in 2026. He bases this on his belief that inflation has peaked, inflation expectations are anchored, and the labor market is weakening with decelerating wage growth. This outlook suggests a less aggressive Fed policy moving forward.