Crypto Updates

Fed’s Stance Is Too Harsh, Economists Insist; Markets Price In 59% Chance Of Rate Cut By May (CORRECTED)

Veteran Trader Peter Brandt Asks Macro Guru If Bitcoin Bull Has Finally Awoken From Deep Slumber

Editor’s note: This story has been corrected to make clearer in the headline the expectation of a 59% chance of interest rate cuts by May is a market bet, and to attribute the 85% chance of no rate cut in March to traders.

The latest findings from the National Association for Business Economics (NABE) Economic Policy Survey, summarizing the opinions of 184 economists, indicate a growing unease with the Federal Reserve’s monetary policies.

While a majority still deems the monetary stance as “about right,” there’s a notable shift in sentiment towards viewing these policies as overly restrictive. Only 8% of respondents now consider monetary policy as “too stimulative,” a significant drop from 26% in March 2023.

In contrast, 21% believe the policy is “too restrictive,” marking a notable increase from 14% observed earlier in the year, and representing a two-decade high in skepticism towards the Federal Reserve’s approach.

At the latest Federal Open Market Committee meeting, Fed Chair Jerome Powell suggested that a rate cut in March is unlikely and displayed a lack of urgency to reduce rates, aiming to gain greater confidence in the inflation downtrend.

Market Expectations On Fed

Financial markets are betting on rates unchanged in the short term. Traders expect an 85% probability assigned to no change in Fed rates come March. However, expectations pivot towards easing, with a 59% chance of a rate cut by May and forecasts suggesting up to five reductions by the end of 2024, according to CME Group Fed Watch Tool.

Investors’ bold wagers on forthcoming interest rate cuts, combined with the U.S. economy’s remarkable resilience, which has significantly delayed recession risks, have propelled the U.S. stock market to fresh record highs. Last week, the S&P 500 Index, as represented by the SPDR S&P 500 ETF Trust (NYSE:SPY), broke through the 5,000-point barrier.

Regarding recession forecasts, 24% of surveyed economists believe the U.S. might already be in a downturn or face one by the end of 2024. A further 22% anticipate a recession in 2025, while a more optimistic 36% don’t foresee economic contraction until 2026 or later.

It’s worth noting that many economists and bankers expressed recession fears heading into 2023. They were wrong. The economy grew 3.1%.


Click Here to Read the Full Original Article at Cryptocurrencies Feed…