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Economy/Business / Investors now see no interest rate cut before election in major blow to Biden
« Last post by mystery-ak on Today at 04:40:33 pm »Investors now see no interest rate cut before election in major blow to Biden
By
Zachary Halaschak
April 30, 2024 11:15 am
.
Investors now peg greater than even odds that there will not be a single interest rate cut until after the November election, a market outlook that complicates President Joe Biden‘s reelection bid.
Just four months ago, investors were pricing in up to six interest rate cuts from the Federal Reserve in 2024, with most expecting that the first cut would have happened in March. But on Tuesday, as top Fed officials huddle in Washington, D.C., investors think the Fed will hold off until at least November.
Investors implied a nearly 52% probability that the Fed will hold rates steady during its September meeting and then would cut during its November meeting, which happens just days after one of the most politically charged presidential elections in modern history, according to the CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.
Still, some investors are even more hawkish, and there are about 1-in-4 odds that the Fed won’t cut interest rates at all this year. Last week, there was about a 10% probability of no rate cuts in 2024, and a month ago, the odds of that were only 1% — showing how recent economic data are shaping perceptions.
The higher interest rates are a result of years of too-high inflation. The rate of inflation began to spike in early 2021 and peaked at over 9% in 2022. Since then, it has largely been falling as a result of the higher interest rates. This year, it has proven stickier than anticipated — not only bad news for the economy and consumers but also bad news politically for Biden.
Inflation, as gauged by the consumer price index, has wobbled between 3% and 3.7% since June 2023 but has not once fallen into the 2%-3% range.
more
https://www.washingtonexaminer.com/policy/finance-and-economy/2984574/investors-now-see-no-interest-rate-cut-before-election-in-major-blow-to-biden/
By
Zachary Halaschak
April 30, 2024 11:15 am
.
Investors now peg greater than even odds that there will not be a single interest rate cut until after the November election, a market outlook that complicates President Joe Biden‘s reelection bid.
Just four months ago, investors were pricing in up to six interest rate cuts from the Federal Reserve in 2024, with most expecting that the first cut would have happened in March. But on Tuesday, as top Fed officials huddle in Washington, D.C., investors think the Fed will hold off until at least November.
Investors implied a nearly 52% probability that the Fed will hold rates steady during its September meeting and then would cut during its November meeting, which happens just days after one of the most politically charged presidential elections in modern history, according to the CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.
Still, some investors are even more hawkish, and there are about 1-in-4 odds that the Fed won’t cut interest rates at all this year. Last week, there was about a 10% probability of no rate cuts in 2024, and a month ago, the odds of that were only 1% — showing how recent economic data are shaping perceptions.
The higher interest rates are a result of years of too-high inflation. The rate of inflation began to spike in early 2021 and peaked at over 9% in 2022. Since then, it has largely been falling as a result of the higher interest rates. This year, it has proven stickier than anticipated — not only bad news for the economy and consumers but also bad news politically for Biden.
Inflation, as gauged by the consumer price index, has wobbled between 3% and 3.7% since June 2023 but has not once fallen into the 2%-3% range.
more
https://www.washingtonexaminer.com/policy/finance-and-economy/2984574/investors-now-see-no-interest-rate-cut-before-election-in-major-blow-to-biden/
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