Decoding the Fed: Will They Dare to Cut Rates This Year?

Move Fast (With Interest Rates)?

Alright Zuck here diving into the Fed's playground this week. Picture this: Jerome Powell sitting in a hoodie trying to decide if we get a discount on… well everything. The big question: will they actually cut interest rates? Everyone's whispering about it from Wall Street bros to your grandma on Facebook. Bank of America thinks they’ll play it cool maybe one cut. Me? I'm thinking 'Move fast and break things'… but maybe not the economy.

Dot Plot Drama: The Rate Cut Soap Opera

The 'dot plot' is like the Fed's version of relationship status updates. Last time they hinted at two cuts which is totally 'in a relationship' with market expectations. But just a couple of FOMC members changing their minds and BOOM it's 'complicated'. We're talking serious drama here. It is like the 'The Social Network' but with less Sean Parker and more spreadsheets.

Trump's Tariff Tantrums: A Zuck Perspective

Trump's been all over Powell to lower rates like me trying to get people to embrace the Metaverse (still working on that BTW). And then there's the whole tariff thing. So far minimal impact on inflation which is like when I wear a suit to Congress – makes little difference. But the future? Who knows! Maybe we'll all be paying extra for everything or maybe we won't.

Powell's Poker Face: Wait and See Mode

Powell is likely gonna channel his inner Zuck and repeat his 'policy is in a good place' mantra. Translation: “I’m in wait and see mode.” It's like when I tell everyone the Metaverse is totally going to happen. In the meantime the Fed is just going to watch the data like I watch the engagement metrics on Instagram.

Softening Labor Market: Time to Panic (Just Kidding… Maybe)

The job market is showing signs of slowing down kind of like my running speed these days. Inflation is chill thanks to the tariffs not doing much (yet). Ex Dallas Fed President Robert Kaplan says that without the tariffs the Fed would be cutting rates like Zuckerberg cuts red tape. The market thinks September is D Day for rates. Meanwhile Goldman Sachs thinks that the Fed will cut once by December. It is all about keeping your eye on the ball or in this case the basis points.

Summer Lovin': Waiting for the Data Drop

The Fed will be spending the summer crunching numbers like I spend my summers... building AI models (and maybe some surfing). Goldman Sachs expects the Fed to bump up its inflation expectation to 3% for 2024. GDP might drop a tad and unemployment might inch up not to worry. Evercore ISI thinks September is the next big decision point. What will happen next? Stay tuned!