For the first time in quite a while, there is an alignment between what the Federal Reserve is signaling about its interest-rate setting this year and what the markets think will happen. More importantly, this has occurred without major disruptions to the economy and markets. Yet, underpinning it all, is an assumption about policy behavior that has neither been fully endorsed by the Fed nor sufficiently internalized by markets.

After diverging quite substantially for an unusually long time, markets have adjusted their implicit pricing for 2024 Federal Reserve rate cuts from the six to seven they expected at the end of last year to just two to three on the eve of this week’s policy meeting. This expectation is consistent with what the Fed has been flagging and is likely to be validated by the “dot plot” that will be published after Wednesday’s gathering.

QOSHE - Market-Fed Alignment Is Welcome, But Not Enough - Mohamed A. El-Erian
menu_open
Columnists Actual . Favourites . Archive
We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

Market-Fed Alignment Is Welcome, But Not Enough

3 0
18.03.2024

For the first time in quite a while, there is an alignment between what the Federal Reserve is signaling about its interest-rate setting this year and what the markets think will happen. More importantly, this has........

© Bloomberg

Get it on Google Play