The Federal Reserve has now held three of its eight scheduled meetings for 2023, raising rates 0.25-percentage-points at each of them. With five meetings remaining for 2023, the Fed views itself as likely to hold rates steady or possibly increase them slightly over the remainder of 2023 since “the process of getting inflation back down to 2 percent has a long way to go” as Chair Jerome Powell said at his May 3 press conference.
The Market’s View
In contrast, markets see a good chance that the Fed starts cutting rates before the end of the year. Specifically interest rate futures implies two to four rate cuts are likely before year-end, with virtually no chance that rates remain at current levels as we enter 2024.
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