Fed Finished Raising Rates, Cut Seen in 2-H 2020

Fed Finished Raising Rates, Cut Seen in 2-H 2020

The Fed is done raising interest rates until at least the end of next year, see at least one rate cut by then.

The latest results come just days after Wall Street stocks touched record highs in a bounce back from a low at the end of last year, thanks in large part to expectations that benchmark borrowing costs have now stopped.

In a 15 March poll, more than 70% of economists penciled in a hike this year. But a similar majority predicted no hikes or at least one rate cut by the end of Y 2020 in a 29 March survey, right after the Fed dramatically shifted its “dot plot” projections to suggest no more hikes this year.

The view the Fed’s tightening cycle, which began in December 2015, is over has strengthened further in the latest poll of more than 100 economists taken 22-24 April. An increasing number of respondents are now predicting a rate cut by the end of Y 2020.

We believe the bar is pretty high for tightening. They do not just want inflation to get back up to 2%, they do want it to go above 2% for a bit.

Interest rate futures are already pricing in the likelihood of a rate cut later this year.

Only a few economists have penciled in a recession by the end of next year.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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