The Federal Reserve is expected to cut interest rates at its September meeting on Wednesday. Hennion & Walsh CIO Kevin Mahn joins Josh Lipton and Josh Schafer on Market Domination to discuss what to expect and how investors should think about the rate change.

“I think we get 25 basis points, but with that said, I do believe they should have cut already back in July, and this would represent the second 25 basis point cut, which would lead us to 50 basis points,” Mahn tells Yahoo Finance.

“In fact, I believe in all likelihood we revert back to their dot plot chart that we saw coming into 2024, which showed three rate cuts of 25 basis points each this year,” Mahn says. There are three Fed meetings remaining in 2024.

In the longer term, Mahn notes that the Fed could make three rate cuts of 25 basis points per year in 2025 and 2026 so that “We're 225 basis points lower by the end of 2026, and we get back down to a rate of between 3 and 3.25%.”

As to how investors should be thinking about the cuts, Mahn encourages people to think about the long term. “If you look out a little bit further, I think it's clear…that rates are going to be lower, yields are going to be lower, and inflation is going to be lower over the course of the next two years. If investors have that mindset and that time frame, there are tremendous opportunities in both stocks and bonds.”

Watch the video above to hear Mahn explain why the Fed can feel comfortable cutting rates despite political pressure.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Naomi Buchanan.