According to a Bloomberg survey of 32 economists, the Federal Reserve will remain on hold until September. Then it will raise interest rates one final time. And that will bring an end of the recent cycle of interest rate increases.
The financial markets beg to differ. Pricing in the Fed Funds Futures market says that the Fed is on hold for all of 2019 and that the next move will be an interest rate cut in early 2020.
The forecast from economists says that the peak benchmark rate for this cycle will be 2.75%. That’s a huge drop from just a month ago when these economists saw interest rates topping out at 3.25% for this cycle.
Ahead of the Fed meeting economists in the Bloomberg survey were predicting that the Fed would cut its outlook for 2019 growth in U.S. GDP to 2.2% from the 2.3% projected in December. That would, I’d estimate, leave the market toking at a growth rate in its Goldilocks comfort zone.
