Wall Street's expectations for interest rate cuts are waning

Wednesday, April 17, 2024 - 19:07
Point Trader Group

US Federal Reserve Chairman Jerome Powell has raised the possibility that there will not be a cut in interest rates anytime soon, and from expectations about the dates of the cuts in the coming months, Wall Street’s questions have fluctuated to become: Will the US Federal Reserve cut interest rates this year?

In his statements, Powell said on Tuesday that there was “no further progress” on reducing inflation to the US Federal Reserve’s 2% target, which means that “it will likely take longer than expected” to gain enough confidence to start easing policy again. Other.

In this regard, Moody’s Analytics chief economist Mark Zandi said, “They have the economy where they want it.” They are now focusing only on inflation numbers. The question is, what is the obstacle here?”

He continued, “I feel that they need two, and perhaps three consecutive months of inflation numbers that are consistent with the 2% target.” In this case, the soonest they can arrive is September. "I don't see interest rate cuts before then."

Although most readings indicate that the inflation rate is around 3% and has not moved significantly for several months, the Fed finds itself with an uphill task in reaching its target.

Wall Street was volatile after Powell's volatile speech, and on Wednesday afternoon, traders had a 71% estimate that the central bank would likely wait until September, with a July rate cut at 44%, according to CME Group's FedWatch gauge.

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