The Federal Reserve meeting takes place on Tuesday-Wednesday. The Fed is pivoting toward interest-rate cuts in 2024, but when will that start?
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Markets see virtually no chance of a Fed rate cut on Jan. 31, with a March 20 cut a tossup. Investors also are split on whether the Fed will cut five or six times for the year.
Fed Rate-Cut Odds
Jan. 31: 3.1% chance of a quarter-point Fed rate cut.
March 20: 47.7% chance of a quarter-point Federal Reserve rate cut.
May 1: 88.1% chance of quarter-point cut by this time, 37% chance of cumulative 50 basis points cut.
For the full year, markets see an 80.6% chance of 125 basis points worth of easing, or five quarter-point cuts. There’s a 47.4% chance of 150 basis points of cuts.
Needless to say, nothing is locked in.
The Fed statement and Fed chief Jerome Powell’s post-meeting press conference will have a big influence on rate-cut odds.
The past week saw a near-perfect mix of strong economic data and slowing inflation at or below the Federal Reserve’s 2% target. This coming week will see a slew of reports, including November job openings on Tuesday, the Q4 Employment Cost Index on Wednesday, the December ISM manufacturing index on Thursday and the December jobs report on Friday.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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