Markets revise expectations for Fed's anticipated pause in June, future rate cuts
Market participants have recalibrated their expectations for future rate cuts by the Federal Reserve's monetary policy committee, data showed on Friday.
The debt ceiling standoff and talks between congressional leaders to reach an agreement have taken over the spotlight this week, but the future of the Fed's monetary policy remains very much on investors' minds.
According to the CME FedWatch tool, up till even a week ago on May 12, markets were pricing in a nearly 30% chance of a 25 basis point cut at the FOMC's scheduled meeting in July. That probability today has dropped to zero.
A slew of economic data reports recently have also pointed to moderating inflation and a cooling economy, which added support to the case for rate cuts.
However, as the month has progressed, market expectations have become more in sync with Fedspeak.
Looking at the expectations for a pause in interest rates hike, as per the CME FedWatch tool, up till a week ago the probability of a pause at the FOMC's June meeting was more than 99%. That near certainty has eroded, with the odds now at around 81%.
The FOMC's next meeting is scheduled to take place from June 13 to 14.
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- psk·2023-05-22thanks for sharing1Report