Fed: The market expects with a quasi-certainty of rate cuts this year

Investing.com – After having raised its rates 4 times in the past year, the Fed will-t-she already to lower them again this year ?

It is in any case what is provided for by the market, as we can see on the barometer of the Fed funds rate Investing.com based on the evolution of money markets.

In fact, the probability perceived by the market of a rate cut as early as the month of July was 58%. For the month of December 2019, the probability that the Fed lowered rates at least once rises to 96.8%.

Worse, to this date, the likelihood that the Fed has lowered its rate twice is 80%.

It is noteworthy in this regard that several major banks have updated their forecasts recently.

According to notes published over the weekend, JP Morgan anticipates now a rate cut of 0.25% in the month of September, and another 0.25% in the month of December.

Barclays (LON:BARC) goes further with a forecast of a rate cut of 0.50% in September, followed by a decrease of 0.25% in December.

In contrast, Goldman Sachs (NYSE:GS) admits that the chances of a rate cut from the Fed have increased, but not enough for this perspective to be integrated in its base case scenario.

On the forex, it should be noted that these expectations, weighing on rate US, are a factor of substantial downward for the Dollar, but could support the US economy and maintain the positive trend of stock markets.

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