Economists project 2 more rate cuts in 2025

A Reuters poll published October 21, 2025 indicates that the Federal Reserve is expected to cut its benchmark rate twice more this year—a 25 basis-point move next week and another in December—before pausing to assess the trajectory of inflation and growth. After that, however, opinions diverge sharply. Some believe inflation will cool enough for more cuts in 2026, while others think the Fed may have to hold rates steady—or even raise them again—if prices stay sticky. The takeaway is that while the central bank is moving cautiously toward easing, there’s no clear roadmap for what happens next. Investors are being told to expect more volatility and uncertainty in the rate environment well into next year.

Our Take

For private market investors, this indecision matters. In private credit, a gradual decline in short-term rates should help borrowers refinance debt and reduce interest burdens, easing some credit stress that built up during the tightening cycle. But the lack of clarity on what happens next makes it harder to plan around future returns. If rates stay higher for longer, borrowing costs could remain elevated, and loan demand may cool. If the Fed cuts faster, yields on floating-rate loans could fall sooner than expected. Either way, investors are being reminded that credit spreads and loan structures—not just base rates—drive total returns. Portfolios built with flexible terms, solid collateral, and resilient borrowers will be best suited for this shifting backdrop.

In commercial real estate, especially the industrial and logistics sectors, the picture is similar. Lower rates would help deals pencil more easily and support refinancing activity, but uncertainty about the Fed’s next steps means cap rates are unlikely to compress much further in the near term. That makes cash flow quality and tenant strength more important than ever. Investors should focus on properties with stable rent growth and inflation protection rather than counting on rate-driven value gains.

In short, the Fed may be done tightening for now—but it’s not done testing investor patience. The next year will reward those who manage risk with flexibility and discipline, not forecasts.

Source: US Fed to trim rates twice more this year; 2026 rate path very unclear

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