The Fed isn’t expected to cut rates in June, but there’s a chance it will guide for a cut this year to appease the market.

by AlexPitti

 

When the market projects at least a 70% chance or more of a specific action/inaction on rates, it is almost always correct. As of Tuesday, the market sees a 22.5% chance of a cut in June which means there won’t be one. The Fed will maintain rates. The table below lists Oxford Economics’ expectations for the June FOMC meeting.

June Fed preview

As you can see, it has the Fed changing from “patient” to “closely monitoring” recent developments. To someone who doesn’t follow the Fed, it probably sounds unnecessary and pointless for the Fed to say it is closely monitoring developments because that’s the Fed’s job. When isn’t the Fed monitoring the economy? The language, however, is important because “patient” means no rate cuts and “closely monitoring” means rate cuts are on the table. The next step after being on the table is to change guidance.

Does Low Inflation Mean Rate Cuts Are Next?

 

 

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