Investors are keenly awaiting tonight’s FOMC statement and Jerome Powell’s speech. Around 76% of investors is predicting a 0.25% rate cut, while the remaining 24% is betting on an even dovish Fed, with a 0.50% rate cut.
In other words, markets have already discounted a 0.25% rate cut and only the second scenario would be a surprise. I think this is quite unlikely, as the Fed is usually moving when the consensus is close or above 60%. Moreover, a 0.50% rate cut while the economy is still growing will put the Fed in a more complicated scenario in case the economy falls into a recession in the next few months.
