Markets Still Expect Rate Cut In June, But Doubt Is Creeping Higher
The mixed news on inflation earlier this week didn’t help, but neither did sticky inflation news derail expectations that the Federal Reserve will start cutting interest rates in June. Yet uncertainty about the timing is creeping higher, as a confluence of factors muddy the outlook.
Let’s start with Fed funds futures, which are currently pricing in a roughly 67% probability that the Fed will start to trim its current 5.25%-to-5.50% target rate at the June 12 FOMC meeting. That’s moderately lower vs. the 77% probability estimate from three weeks ago.