Those 3 Fed Rate Cuts Are Starting to Look Shaky

Friday's strong jobs report has economists adjusting their expectations
By Kate Seamons,  Newser Staff
Posted Apr 8, 2024 9:12 AM CDT
Fed Rate Cuts Are Looking Like Less of a Sure Thing
Pedestrians walk past the New York Stock Exchange building on March 25, 2024, in New York.   (AP Photo/Frank Franklin II, File)

Fewer than three weeks ago, the Fed signaled that they still expected to cut their key interest rate three times in 2024, taking it down three-quarters of a point from its current 5.25% to 5.5% range. Traders are now growing increasingly doubtful that many cuts will come to pass this year. As the AP puts it, "The Fed typically cuts only when the economy appears to be weakening and needs help." And after Friday's expectations-defying jobs report (a sizzling 303,000 jobs were added in March), economists and traders are seeing just one or two cuts more likely—or even none. Predictions and more:

  • The latest data points: In addition to the strong jobs report, the AP cites "an unexpectedly buoyant report showing that factory output is expanding again after months of contracting, suggested that the economy is extending an unexpected run of healthy growth."
  • The next data point: The outlook for rates could come a bit more into focus on Wednesday with the release of the consumer-price index, reports the Wall Street Journal.
  • If there aren't summer cuts: Some analysts think that if a cut doesn't come soon they won't come at all in 2024 because officials will want to avoid cutting in the midst of the presidential campaign "to avoid political entanglements," per the Journal.
  • Summer expectations: CNBC reports the CME's FedWatch tool puts the probability of a rate cut at less than 50% for both June and July.
(More Federal Reserve stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.