Posted 1/30/2024, 3:31:00 PM
Fed Seen Keeping Rates Steady For Now, But Markets Betting on Cuts Despite Risks
- Fed expected to leave rates unchanged at 5.25%-5.50% at this week's meeting, but market pricing in aggressive rate cuts this year
- Past precedent shows Fed typically cuts rates aggressively only around recessions, not preemptively
- Late 1980s rate cuts fueled stock market rally that ended with 1987 Black Monday crash
- Stocks already at high levels, risk of fueling unsustainable rally with major rate cuts now
- Market may be betting on rate cuts to keep real rates steady as inflation declines, but Fed unlikely to oblige without recession