Will the Federal Reserve cut interest rates as early as March 2024?
Investors certainly think so.
Fed Chair Jerome Powell and his colleagues have insisted that it is premature to discuss cutting rates, arguing that policy needs to be in restrictive territory for longer.
But the financial markets don’t believe it for one second.
Despite the U.S. economy potentially slowing heading into 2024, are investors betting that the country will slip into a recession by the spring?
Remember, the narrative on Wall Street all along has been that the central bank would slash interest rates once inflation returned to the two percent target and the economy would slow.
Instead, the markets are penciling in rate cuts just because, for whatever reason, policy must be loose.
According to the CME FedWatch Tool, here is what investors are betting will happen in March:
I think the fed is trapped. Because of budget defecits. The fed will be forced to delay rate cuts to lower inflation. Or be forced to raise rates eventually. Even higher.
Or just embrace continued money printing and inflation picking up.