Aug 7, 2019

Investors are betting on multiple Fed rate cuts by year-end

Data: CME Group; Chart: Andrew Witherspoon/Axios

Despite Fed chair Jay Powell's "hawkish" rate cut last month, expectations for more cuts from the Fed are growing, thanks in large part to President Trump and the trade war.

What's happening: Investors are now pricing in a 0% chance the Fed doesn't move at its next meeting in September and a nearly 50% likelihood of 3 rate cuts by year-end.

  • Fed funds futures prices tracked by CME Group's FedWatch tool shows investors see an almost equal chance that the Fed will either cut rates by a full percentage point by its December meeting or that it cuts 25 basis points — that's in addition to July's 0.25% cut.

Watch this space: The only reason for the Fed to cut rates by 1% or more in a year would be that the U.S. economy is in peril.

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Fed discord over cutting rates could mean future headaches for Powell

Fed Chair Jerome Powell. Photo: Mark Wilson/Getty Images

The fight over the future of monetary policy at the Fed sharpened publicly ahead of the upcoming meeting in September.

What's new: Boston Fed president Eric Rosengren made the case against another cut to U.S. interest rates while St. Louis Fed president James Bullard said he would be in favor of a 50 basis point cut.

Go deeperArrowSep 4, 2019

Trump calls on Fed to cut rates by "at least 100 basis points"

President Trump on Monday tweeted that the Federal Reserve should cut interest rates by "at least 100 basis points, with perhaps some quantitative easing as well," in order to boost the U.S. and world economy.

"Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to 'will' the Economy to be bad for purposes of the 2020 Election. Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world. The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!"
Go deeperArrowAug 19, 2019

Fed tweets show Trump doesn't understand central banking

Trump announces Powell as his Federal Reserve nominee in November 2017. Photo: Drew Angerer/Getty Images)

President Trump's latest tweets have continued a pattern of attacking the Federal Reserve and his handpicked chairman Jerome Powell for months using a mix of half-truths, mischaracterizations and hyperbolic fantasies, such as a claim that the stock market would be 10,000 points higher if not for the Fed.

Driving the news: On Wednesday morning, Trump said on Twitter that the Fed "cannot 'mentally' keep up with the competition - other countries. At the G-7 in France, all of the other Leaders were giddy about how low their Interest Costs have gone. Germany is actually “getting paid” to borrow money - ZERO INTEREST PLUS! No Clue Fed!"

Go deeperArrowAug 29, 2019