Fed Rate Cuts Will Not Save the Economy

Commentary The market-implied federal funds rate indicates a string of cuts starting in January 2024 and culminating in a rate of 4.492 percent in January 2025. These expectations are based on the perception that the Federal Reserve will achieve a soft landing and that inflation will drop rapidly. However, market participants who assume rate cuts will be bullish may be taking too much risk for the wrong reasons. The messages from the Federal Reserve contradict the previously mentioned estimates. Fed Chair Jerome Powell continues to repeat that there is more likelihood of rate hikes than cuts and that the battle against inflation is not over....