Fed's Rate Cuts Could Fuel Inflation Risks in 2026

21 days ago

Jim Bianco

"And the mistake is the Fed is cutting rates. They've cut 75 basis points in 2025 to add in to the 100 basis points that they cut in 2024. And they keep citing the labor market. Are they completely misreading this? And yes, the labor market's weak, but the other half labor supply. We don't need that many jobs and we're doing fine. And that will dictate all of 26. If we've overdone it, we risk too much inflation."

Jim Bianco argues that the Fed's aggressive rate cuts, despite a labor market that doesn't require massive job growth, could backfire by fueling sustained inflation. He warns that the easing policy, combined with shifting demographic pressures, may lead to overheated pricing in 2026.

Related Stocks