Markets currently expect the Federal Reserve to deliver its next quarter-point interest-rate reduction in June. That’s a bit later than was expected just a few weeks ago.
In December, traders expected the cut to come a bit sooner, according to the CME FedWatch tool. The odds of rates being where they are now at the May 7 Fed decision are currently 56%, up from 38% a month ago. The odds of them being a little lower than they are now after the June 18 meeting stand at 45%, similar to a month ago.
A critical question is how much the current level of interest rates is holding back economic growth. Fed voter Beth Hammack, who opposed the rate cut in December in favor of keeping borrowing costs unchanged, said in an interview this month that rates are “moderately restrictive.” That means they’re still high enough to slow activity, but won’t be for long if and when the Fed cuts further.