Hopes For Fed Rate Cuts Are Fading

These days, the Federal Reserve’s own benchmarks are waiting to reduce the interest rate, a little waiting for Godot: the arrival date for a long time anticipated monetary policy moves pushes in the future.

Financial markets overtaken their expectations to cut rate again last week, as the labor market remains unexpectedly healthy in May after a report on job development. The flexibility of the labor market puts some pressure on the Federal Reserve to cut interest rates to promote the economy and to prevent severe growth in unemployment.

On Monday, investors were sure that the Jobs report indicated that the Central Bank did not cut the rate of Federal Funds soon, according to the fedwatch tool of the CME Group, which predicts the rate movements based on Fed Fed Fund Futures Trading Data. Investors were pricing at 83% probability that the Fede policy committee would keep its rates stable in June and July meetings. It is 76% a week ago and 40% a month ago.

Fed officials themselves indicated that they are not in a hurry to cut interest rates, which will put pressure down on all types of loans at the interest rates. In contrast, President Donald Trump has repeatedly sought fed cut rates: he asked the authorities to reduce the rates lower than a full percentage point instead of their normal quarter-point growth, and criticized the Central Bank not to cut rates soon.

The approach to interest rates from the end of 2024 has changed dramatically when the Fed officials went into the rate of rate cut, reducing major Fed funds reduced the rate of one percent in three meetings.

In January, Fed refused to re -cut rates, allowing them to be “restrictive”. Fed officials have cut a higher rate than the fear that the tariffs that Trump has imposed this year can increase prices and set a new round of inflation.

Since then, when the rate cuts may begin again, expectations may be on a roller coaster ride as the financial markets and forecasts try to predict the outcome of the business war: If the tariff pulls down the job market to endanger the wave of large -scale trimmed, the fed may step into rates to help the economy. But if inflation stays above the target of 2% annual rates, the fed may keep the rates longer to force it down.

Some economists estimate that the fed will be forced to cut soon instead of soon. For example, economists in Panthon macroeconomics reduced the importance of healthy job development data in May, given that recent jobs reports have been heavily revised. The Bureau of Labor Statistics regularly modifies its monthly job reports as new survey data comes. For example, the jobs of May for the last two months reported a job growth for the last two months.

Economists headed by Samuel Tombs, the main American economist of Panthian, said, “The criticism of Mr. Trump of Fed’s current Stasis will probably prove to be correct.”

Panthean hopes that Fed cut three quarter-points before the end of the year, as the job market would be revealed.

At the other end of the spectrum is the forecasts in the desert bank, who expect the Fed to stop the rate cuts by December and make just one cut in 2025. DB’s economists, using an ownership AI tool, stated that speeches by Fed officials have become more “Hawkish”, who are recently fighting with saving.