While Wall Street has maintained that the Federal Reserve would move to cut interest rates several times this year, some investors think that the rates may not be touched at all in 2024, The Wall Street Journal reports.
Last week’s jobs report indicates the economy is continuing to strengthen, leading more traders to bet that the Fed may cut interest rates just once or twice this year—or perhaps not at all. It’s a significant shift from the three quarter-point cut forecast that officials have said they would take.
The shift could also challenge the stock market rally that has been built on the idea that the economy would slow enough for the Fed to lower those borrowing costs from its multi-decade high.
“The last of the economic bears are throwing in the towel,” says Joe Brusuelas, chief economist at RSM US. “We have a sustained economic expansion, and investors who manage risk are now repricing it.”
A new perspective on the outlook for rates will come to investors this coming week with Wednesday’s release of the consumer-price index. Inflation has cooled significantly from 40-year highs, but two months of hotter-than-expected readings have helped reinforce the Fed’s wait-and-see approach to cuts.
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