Posted 2/4/2024, 12:05:00 PM
Fed Rate Cut Odds Plummet as Officials Reinforce Guidance Amid Tight Labor Market
- Odds of a March rate cut have plummeted to 20% and may go to 0% as Fed speakers reinforce latest guidance
- Fed Chair Powell unlikely to change message from latest FOMC; wants clear evidence inflation approaching 2% target
- Job numbers show structural labor shortage with 5M fewer workers since pandemic but strong wage growth
- Despite high real rates, breakeven inflation remains near 2% suggesting policy is at neutral level for now
- Fantasy of 5-6 rate cuts in 2024 increasingly improbable given resilient economy and tight job market