When will the Fed begin to cut interest rates? It’s a mystery
CNN
Nowadays, it’s anyone’s guess when the Federal Reserve will begin to cut interest rates this year — if at all.
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link. Nowadays, it’s anyone’s guess when the Federal Reserve will begin to cut interest rates this year — if at all. Fed officials are meeting this week, starting Tuesday, to discuss rates and set policy. They’re widely expected to hold rates steady for the sixth straight meeting. But analysts are hoping for some much needed clarity on what to the expect from the central bank in the coming months. That guidance will be key for market observers who clearly have divergent views on interest rates. Forecasts from major Wall Street banks on the first rate cut are all over the place: JPMorgan and Goldman Sachs expect the first cut in July, while Wells Fargo is betting on September. Bank of America doesn’t expect the first cut until December. Some Fed policymakers, meanwhile, have even floated the possibility of a rate hike, instead of a cut. According to the futures market, Wall Street’s best bet on the first cut is September — and not by a lot. There is currently a roughly 44% chance of the Fed cutting rates in September versus a 42% chance of another pause, the CME FedWatch Tool shows. The odds of an initial cut in November are a bit lower. “Right now, everybody seems to be just throwing a dart and saying when they think they’re going to start cutting rates,” Liz Ann Sonders, chief investment strategist at Charles Schwab, told CNN in an interview last week. “There needs to be this analysis on what conditions will occur between now and whenever they start cutting.”