Guggenheim CIO: The Fed will cut in December and again in 2026 as economy turns 'sluggish'
- - Guggenheim CIO: The Fed will cut in December and again in 2026 as economy turns 'sluggish'
Claire BostonNovember 13, 2025 at 9:51 PM
0
The Federal Reserve is likely to cut rates again in December amid mounting evidence that parts of the economy are slowing down, according to Anne Walsh, chief investment officer of Guggenheim Partners Investment Management.
“I’m in the camp that I believe they actually will cut in December,” Walsh said at Yahoo Finance Invest 2025. “Because I look at the Fed Beige Book, and it seems to indicate a lot more slowing and fraying around the edges in particular.”
The $357 billion asset manager is closely watching the “bifurcated economy,” Walsh said, where lower-income consumers and small businesses appear to be struggling while wealthier people and larger companies are prospering.
Read more: What is a K-shaped economy, and what's causing the divide?
“As a result, you’ve got this two-speed economy,” she said. “The Beige Book really represents this broader level of the economy, and it’s really becoming much more sluggish.”
Those signs of weakness are likely to push the Federal Reserve to adopt a lower neutral rate, perhaps around 3%, and cut rates further, she said.
“I still also contend that we’re going to see more rate cutting in 2026 as well,” Walsh said.
After cutting rates at the end of October amid concerns about the labor market, some Fed officials are now saying the case for another cut in December is less clear. Traders now see roughly 50-50 odds of a 25 basis point reduction next month, according to CME FedWatch.
Walsh said she believes the finalists President Trump is considering to be the next Fed Chair are all “pretty well-qualified,” though she’d favor someone with an economics background for the role.
“No matter what happens, I think we’re looking at a more dovish Fed composition,” she said.
Lower interest rates, along with tax benefits stemming from the One Big Beautiful Bill Act, should keep the US out of a recession, she said. The economy is late-cycle, but not yet recessionary, she said, and she’s not concerned about signs of overvaluation in artificial intelligence stocks because, unlike during the dot-com bubble, today’s companies are making money, and so far, not taking on too much debt to fund their expansions.
“I think there’s more for this market to run, and I think technology will continue to drive stock market performance,” Walsh said.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
Sign up for the Mind Your Money newsletter
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
Source: “AOL Money”
