A jogger runs past the US Federal Reserve in Washington, DC on August 18, 2022. (Photo by MANDEL NGAN / AFP)
NEW YORK: Federal Reserve (Fed) officials keep repeating the mantra they don’t plan to cut interest rates next year. Traders keep doubting them.
Eurodollar futures showed reduced expectations Wednesday for Fed interest-rate cuts in 2023 but still price in around a one quarter-point move and at least two more in 2024.
Fed Bank of San Francisco president Mary Daly and Fed Atlanta president Raphael Bostic were the latest to bang the drum on the need to keep tightening in place to reduce inflation that remains near a four-decade high.
Traders briefly erased bets on 2023 cuts after the Fed’s strongly hawkish meeting last month, but a series of global economic and geopolitical shocks have reinforced deep concerns that the United States and other major economies will tip into recession.
Investors refuse to believe Fed chair Jerome Powell will remain steadfast in the face of a severe downturn. — Bloomberg
