Markets are almost certain the Fed will cut rates by 0.25% Wednesday, despite a strong economy with low unemployment and 3% growth. The decision comes as inflation remains stubbornly above target. Economists are divided on whether the cut is the right move.
Futures market traders are pricing in a near-certainty that the Fed on Wednesday will lower its benchmark overnight borrowing rate by a quarter percentage point. 'I'd be inclined to say 'no cut,'' former Kansas City Fed President Esther George said Tuesday during a CNBC 'Squawk Box' interview. In addition to the rate decision, the Fed will update its 'dot plot' of future expectations as well as the collective outlook on the state of the economy.
Inflation is stubbornly above target, the economy is growing at about a 3% pace and the labor market is holding strong. Put it all together and it sounds like a perfect recipe for the Federal Reserve to raise interest rates or at least to stay put.That's not what is likely to happen, however, when the Federal Open Market Committee, the central bank's rate-setting entity, announces its policy decision Wednesday. Instead, futures market traders are pricing in a near-certainty that the FOMC actually will lower its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points. That would take it down to a target range of 4.25%-4.5%. Even with the high level of market anticipation, it could be a decision that comes under an unusual level of scrutiny. A found that while 93% of respondents said they expect a cut, only 63% said it is the right thing to do.' interview. 'Let's wait and see how the data comes in. Twenty-five basis points usually doesn't make or break where we are, but I do think it is a time to signal to markets and to the public that they have not taken their eye off the ball of inflation.' A new ‘super funding' limit for some 401(k) savers goes into effect in 2025. Here's how to take advantage, the Fed's preferred inflation gauge, ticked higher in November to 2.5%, or 2.9% on the core reading that excludes food and energy.and the committee. Former Boston Fed President Eric Rosengren also recently told CNBC that he would not cut at this meetin
FED INTEREST RATES INFLATION ECONOMY MARKET EXPECTATIONS
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