AFMC - Fed Watch: Push It Back Push It Back Way Back

2024-05-02 03:20:00 ET

Summary

• The Fed kept rates unchanged at the May FOMC meeting, maintaining the Fed Funds trading range at 5.25% to 5.50%.
• Rate cut expectations have shifted dramatically, with the market now pricing in fewer than two rate cuts compared with the initial expectation of six rate cuts for the year.
• The Fed's decision on rate cuts will be data-dependent, with a focus on progress in inflation and potential softening in labor market conditions.

By Kevin Flanagan

Once again, the Fed kept rates unchanged at the May FOMC meeting. As a result, the Fed Funds trading range remains in the 5.25-5.50% band introduced in July 2023 and still resides at a more than 20-year high-water mark. For those keeping track, this represents the sixth consecutive FOMC meeting in which policymakers decided to take no action on the rate front. Despite economic and inflation data that continue to challenge rate cut expectations, Powell & Co. still seem to expect that a rate cut will more than likely occur sometime later this year. However, what investors are finding out is that this potential easing move keeps getting pushed back, and increasing uncertainty about what this potential rate-cutting episode might eventually look like has entered into the equation....

For further details see: