SINGAPORE/LONDON, Dec 24 (Reuters) – The U.S. dollar was on the back foot on Wednesday and set for its biggest yearly fall since 2017, possibly with more to come, as investors wagered the Federal Reserve would have room to cut rates further next year even as most of its peers look finished with easing.
Tuesday’s solid U.S. GDP reading failed to move the dial on the rate outlook, leaving investors pricing in roughly two more Fed cuts in 2026.
“We expect the FOMC to compromise on two more 25 bp cuts to 3-3.25% but see the risks as tilted lower,” said Goldman Sachs Chief U.S. Economist David Mericle, citing slowing inflation as a reason for the forecast.
The Federal Reserve signaled a higher bar for 2026 interest rate cuts at its December meeting, potentially snatching away a much-needed reprieve for millions of Americans saddled with debt.
Household debt ballooned to a record $18.6 trillion during the third quarter of 2025, and the central bank is expected to lower its benchmark rate just once or twice next year to soften borrowing costs.
But this slow-and-steady approach means 2026 won’t be the year of relief many borrowers are hoping for. Instead, a stagnant job market and sky-high home prices are expected to keep first-time buyers sidelined. But even if the Fed is moving too slowly to significantly help borrowers, experts say those carrying high-interest credit-card or auto debt can still take proactive action in the new year by working to improve their credit scores and refinancing loans.
https://www.msn.com/en-us/money/personalfinance/ar-AA1SUS8W
The dollar is on the ropes and heading for its worst year since 2017, even after a strong GDP print.