Several Federal Reserve presidents are set to speak on Tuesday, including Cleveland's Loretta Mester, Minneapolis' Neel Kashkari, Boston's Susan Collins, and Philadelphia's Patrick Harker. Wall Street will be listening for further Fed sentiment on interest rate cuts after Chair Jerome Powell stated they were unlikely to show up in early 2024.
Yahoo Finance Live's Seana Smith and Brad Smith discuss Wall Street's adjusted forecasts for rate cuts and what bolstered consumer confidence signals for inflation.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- Minneapolis Fed President Neel Kashkari penning an essay Monday writing, "The current stance of monetary policy may not be as tight as assumed given the low" unemployment or low rates of "environment before the pandemic" here, and that "more time to assess upcoming economic data" might be needed before the Fed starts to cut rates.
Tuesday's spate of Fed speak begins with Cleveland Fed President Loretta Mester set to speak today around noon followed later on by Kashkari, Collins, and Harker. And so this as we got another hot employment situation report last week, of course, with the Fed.
And the next two meetings in focus here. All eyes are really on May at this point as to whether or not we see that first rate cut.
- Yeah you're exactly right there. When you take a look at the latest gauge that we're getting here from traders, only about 10% are expecting a rate cut at the March meeting. I'm actually surprised that it is as high as 10% given what we heard from Powell last week, what we heard from him during his discussion on 60 Minutes over the weekend, and then, of course, what we're hearing from Kashkari yesterday and what we will likely hear from a number of Fed officials here later on today and for the rest of this week.
And as we-- and as traders and as investors, as economists adjust to those renewed expectations, Deutsche Bank was out with an interesting call here, reversing their recession call. They had been expecting a recession later this year. They are now no longer expecting a recession. They've also adjusted the pace of rate cuts that they expect to see from the Fed. They now expect 100 basis points of rate cuts this year, less than its earlier expectations of 175 basis points there.
They talk about cooling inflation, the fact that the labor market-- at least from their view-- is coming into better balance, therefore adjusting their recession call and no longer expecting a recession this year.