Fed Policy Rate Change over 6 Months Prices in (Futures) vs. Actual

Fed Policy Rate Change over 6 Months Prices in (Futures) vs. Actual Actually, the Fed decides when to raise rates, but the market decides when to cut rates. This chart shows that rate expectations are highly predictive six months in advance. See also “Markets Have Accurately Priced in Cuts before Easing Cycles Begin.” Picture source:…

Expected Fed Funds Rate

Expected Fed Funds Rate as of July 10, 2019 Fed funds futures for January 2020 imply an expected rate of only 1.80%. Click the Picture to Enlarge

Expected Fed Funds Rate as of June 20, 2019

Expected Fed Funds Rate as of June 20, 2019 Fed funds futures for January 2021 imply an expected rate of only 1.26% (traders are pricing in more than four full cuts). See also “Markets Have Accurately Priced in Cuts before Easing Cycles Begin.”