Wall Street thinks interest rates are poised to come down faster than the Federal Reserve does—a wager that is already boosting the economy and markets by making it cheaper for Americans to borrow. Bets in the futures market show investors expect that the Fed’s benchmark short-term rate will fall just below 3% by the end of next year, from slightly above 4% now, according to LSEG data. That marks a sizable shift from May, when investors thought that rates would fall only to around 3.5% at the end of 2026. It is also below what most Fed officials are forecasting. Their latest “dot plot” showed a median expectation that rates end next year at 3.4%—the equivalent of two fewer quarter-point rate cuts than investors are anticipating.
Read more: WSJ.com: Markets
