Inflation Is Stubborn And Jobs Are Plentiful. So Why Does Everyone Expect Rate Cuts? [Video]

Financial market participants widely expect officials at the Fed to cut the central bank’s benchmark fed funds rate by 0.25 percentage points at the central bank policy committee’s next meeting. Markets were pricing in an 85% chance of a cut Friday afternoon, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. It would be the third rate cut in as many meetings.

Fed officials are attempting to cut interest rates enough to boost the economy and prevent a surge of unemployment, but not so fast that they reignite the high inflation that roiled the economy in 2022. The fed funds rate influences interest rates on all kinds of loans, including mortgages and credit cards, so cutting …