Wall Street is drifting Monday ahead of the Federal Reserve’s next meeting to focus interest rates.
Stocks have been see-sawing since early August on uncertainty about whether the Fed is finally done with its drastic hikes to interest rates. Higher rates have helped cool inflation from its peak last summer, but they also hurt prices for stocks and other investments while slowing the economy.
But just as much attention will be on what Fed officials say about next year, when investors expect the Fed to begin cutting interest rates. Investors crave such cuts, which typically loosen up financial conditions and give boosts to financial markets. The big question is by how much the Fed could cut.Economists at Goldman Sachs expect Fed officials to indicate a full percentage point of cuts next year, after raising rates one more time this year to a range of 5.50 per cent to 5.75 per cent.
The rise in fuel prices, along with worries about rates staying higher for longer, have helped push up Treasury yields across the bond market. Worries about a possible recession also continue to hang around, even though they’ve diminished with successive reports showing the economy and job market continue to hum.
It’s been 15 months since the most recent such warning of a recession triggered in June 2022. In the past, the longest stretch between such a trigger and a recession was the 16 months before the Great Recession. If this matches that one, it could imply a recession beginning in October, Ramsey says.
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