The Fed Cannot Cut Rates as Fast as Markets Want

Commentary Market participants started the year with aggressive expectations of rapid and large rate cuts. However, after the latest inflation, growth, and job figures, the probability of a rate cut in March has fallen from 39 percent to 24 percent. Unfortunately for many, headline figures will support a hawkish Federal Reserve, and the latest comments from Fed Chair Jerome Powell suggest rate cuts may not come as fast as bond investors would like. For the Federal Reserve, the headline macro figures show a strong economy, solid job creation, a low unemployment rate, stronger GDP growth, and persistent inflation. The real economy shows a weaker picture....