Taking it slow Taking it slow http://www.federatedhermes.com/us/static/images/fhi/fed-hermes-logo-amp.png http://www.federatedhermes.com/us/daf\images\insights\video\camping-man-lake-small.jpg March 7 2024 March 7 2024

Taking it slow

The Fed is in no rush to cut rates.

Published March 7 2024
My Content
Video Transcript
Question: What have markets priced in for the March FOMC meeting?
Damian McIntyre: Markets have revised their rate cut expectations following the January FOMC meeting and the January inflation report. In the January FOMC meeting, the Federal Reserve stressed that they would continue to be data dependent on their interest rate policy into the end of the year. In particular, Jerome Powell stated in his press conference that he would not look to cut rates until he had more confidence that they had made significant progress towards their inflation target. Furthermore, Jerome Powell in his questions and answers stated that he was particularly focused on shelter inflation. He thought that shelter inflation could come down in the second half of this year, but it was more of a question of when it might come down. As a result, market expectations shifted following that meeting by moving rate expectations back from March into May and further parts of this year but did not necessarily change how many rate cuts they expected for the year. That did change following the January inflation report that came in much higher than investors were hoping for. And markets adjusted their rate cut expectations to as few as four for the year. This is still higher than what the Federal Reserve is projecting. The Federal Reserve in their famous dot plot is expecting that we would see three rate cuts in the year. With the economy strong and the labor market still very tight, we would expect Jerome Powell to continue to monitor the data as it comes in and not be in any rush to cut rates this year.
Tags Equity . Monetary Policy . Markets/Economy .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

Federated Equity Management Company of Pennsylvania