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Afternoon Note

Pivotal Moment

By Charles Payne, CEO & Principal Analyst
3/20/2024 1:33 PM

In a few minutes, we will hear the Fed has left rates unchanged, but then in the Q&A session, we will try to find out when they will cut rates.

Let’s see how we came to this pivotal moment.  The wave of rare hikes that at one point saw a record string of 75 bps increases.

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These moves took the Fed fund rate to 5.25- 5.50.

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The goal was to quell inflation, but suddenly, higher inflation is becoming a central concern for everyone from households to global fund managers.

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Meanwhile, Wall Street had already tempered its rate cut expectations – I’m not sure how much the stock rally could endure with further reductions in rate cut expectations.

Bank of America market pricing on Fed rate cuts chart

Not only is the street modeling fewer rate cuts, but no landing is gaining speed. This could be good for the stock market, but it means no relief for consumers that desperately need a break.

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No rate cut is expected, but the so-called Dot Plot will guide future assumptions.

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Comments
I know many are now conditioned to expect lower interest rates. But should they really come down much from where they are? During the 90ís and early 2000ís we did OK with rates about where they are now. And it is about time that savers with cash got a more realistic return on their savings. It also seems that it will be difficult for many inflation pressures to go down with shipping and oil costs being higher. And of course with the government constantly spending much more than they take in.

Thanks for your daily commentaries Charles!


Stuart on 3/20/2024 2:51:22 PM
Ditto what Stuart said!

Tom Hall on 3/28/2024 12:41:09 PM
 

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