Markets Expect Fed Rate Cuts in 2024 Despite Sticky Inflation
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Markets still expect the Fed to cut rates in 2024 despite sticky inflation data. The 2-year yield pricing signals rate cuts ahead.
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Fed funds futures indicate a 77% chance of a rate cut at the June FOMC meeting, but not at March or May meetings.
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Comparing the Fed funds rate to inflation and unemployment suggests policy is tight and rate cuts are reasonable.
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The basic Taylor rule model estimates the Fed funds rate should currently be substantially lower.
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There's debate on rate cut expectations, with some like Larry Summers seeing a 15% chance rates rise instead to tame inflation.