Fed Rate Cut in June Now Less Certain, Though Case for Easing Remains

• There is growing uncertainty about whether the Fed will cut interest rates in June as previously expected, with the probability declining from 77% to 67% • The bond market and economic models suggest there is room for the Fed to ease monetary policy • Some prominent voices like Jamie Dimon and Mark Okada advise the Fed to wait before cutting rates • Former Treasury Secretary Larry Summers argues the neutral rate is higher than the Fed’s estimate, implying less need for rate cuts
• However, Fed Chair Powell recently reaffirmed plans to start dialing back policy restraint at some point this year