Excerpt from Dismal.com:
A U.S. economy that is on the edge of a recession, if not already in one; controlled inflation; and unsettled financial markets all argue for additional rate cuts when the Federal Open Market Committee concludes its two-day meeting on Wednesday. Today’s dour report on new-home sales and growing fears of a recession have led markets to increase their bets on a 50-basis point reduction in the target rate. According to fed funds futures, there is roughly a 90% probability that the Fed will cut interest rates to 3% from its current 3.5%, bringing the total reduction to 125 basis points in just more than a week.
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I’ve heard from several sources that the FOMC is expected to cut rates about 50 basis points, consistent with the above excerpt. It’s a huge, quick drop, but I think it’s actually necessary, especially given the expectations. If the Fed doesn’t cut rates by 50 basis points, I’m afraid confidence in the economy’s going to moderate too much, and fears of recession will be higher than ever.
Fed’s next move
Excerpt from Dismal.com:
A U.S. economy that is on the edge of a recession, if not already in one; controlled inflation; and unsettled financial markets all argue for additional rate cuts when the Federal Open Market Committee concludes its two-day meeting on Wednesday. Today’s dour report on new-home sales and growing fears of a recession have led markets to increase their bets on a 50-basis point reduction in the target rate. According to fed funds futures, there is roughly a 90% probability that the Fed will cut interest rates to 3% from its current 3.5%, bringing the total reduction to 125 basis points in just more than a week.
——
I’ve heard from several sources that the FOMC is expected to cut rates about 50 basis points, consistent with the above excerpt. It’s a huge, quick drop, but I think it’s actually necessary, especially given the expectations. If the Fed doesn’t cut rates by 50 basis points, I’m afraid confidence in the economy’s going to moderate too much, and fears of recession will be higher than ever.