VGSH - Fed Still Expects To Cut Rates Despite Sticky Inflation
2024-03-21 10:30:00 ET
Summary
- The Federal Reserve lifted its outlook for core PCE inflation in 2024 but reaffirmed expectations that interest rates will probably fall by the end of the year.
- The policy-sensitive 2-year Treasury yield fell for a second day on Mar. 20, dropping to 4.59%, a middling level relative to the range of the past month.
- Despite the ongoing bias favoring rates cuts, the macro data still suggests that the timing for the start of policy easing could be delayed.
The Federal Reserve lifted its outlook for core PCE inflation in 2024 but reaffirmed expectations that interest rates will probably fall by the end of the year. Despite the apparent conflict, the market quickly jumped on the bandwagon by bidding up bond prices (and lowering yields) and firming up expectations for rate cuts via the implied forecast in Fed funds futures....
Fed Still Expects To Cut Rates Despite Sticky Inflation