Current Expectations
The market is currently predicting a gradual decline in the Fed funds rate over the next two years. As of 24 September 2024, the rate is expected to decrease from 5.19% to 4.22% by the end of 2024 and to 2.94% by the end of 2025. This forecast is based on the belief that the Federal Reserve will gradually ease monetary policy to support economic growth and combat inflation.
The Unpredictability of Market Expectations
However, it is important to note that market expectations are often subject to change. Historical data shows that these predictions do not always materialize as expected. Economic conditions, geopolitical events, and other factors can cause market sentiment to shift, leading to unexpected changes in interest rates.
The Balancing Act of Interest Rate Policy
The Federal Reserve faces a delicate balancing act when setting interest rates. On the one hand, they must lower rates to stimulate economic growth and prevent a recession. On the other hand, they must be cautious about raising inflation, which can erode the value of currency and make it more difficult for businesses and consumers to afford goods and services.
It is important to remember that market forecasts are not infallible. They are based on assumptions and models that may not accurately reflect future events. As such, individuals should be cautious about relying too heavily on these predictions.
Disclaimers and disclosures : https://tinyurl.com/2763eyaz
If you have any questions, please write to support@weekendinvesting.com
