The early days of 2026 feel a lot like 2025 as they relate to the debate over lower interest rates. While there are many bullish opinions, as of Jan. 6, the CME FedWatch tool puts the odds of a pause at the Fed’s January meeting at 84%. Many analysts now believe the Federal Reserve will make only one rate cut in 2026.
It’s fair to say that investors haven’t priced “higher-for-longer" rates into their initial 2026 stock market projections. But if the Federal Reserve pauses in January, investors will have to consider what that could mean for stocks in the first quarter and, perhaps, throughout the year.
