Investors Pull Back Expectations for Rate Cuts As Fed Signals Caution on Inflation Data
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Investors have pulled back expectations for interest rate cuts in 2024, now seeing 3 cuts instead of 6. Goldman Sachs also reduced its projection from 5 to 4 cuts.
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Fed officials' recent comments suggest the first rate cut may not happen as early as previously expected. More inflation data is needed before deciding on cuts.
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Markets were too aggressive in anticipating early and rapid rate cuts. The Fed will likely be more cautious about cutting too soon after being late to raise rates.
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January economic data was noisy with conflicting signals. Strong labor market but weaker consumer spending and housing activity.
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Despite lower rate cut expectations, stocks have held up signalling financial market resilience. Volatility also remains low.