A Fed rate cut is coming. How big is anyone's guess.
The Federal Reserve is poised to cut its key interest rate Wednesday, the first time since the onset of the Covid-19 pandemic that it has pushed it lower.
The Federal Reserve is poised to cut its key interest rate Wednesday, the first time since the onset of the Covid-19 pandemic that it has pushed it lower.
A reduction to the central bank’s federal funds rate serves as a benchmark for other borrowing costs throughout the economy. And while that move has been widely anticipated, investors have been unable to predict how large the cut will be.
On Tuesday, a survey by CNBC correspondent Steve Liesman showed a majority of respondents forecasting a quarter-point cut from the current 5.3% level, even as Wall Street traders said it was more likely that the central bank would issue a half-point cut.
The Fed tends to move in quarter-point increments — and until recently, there was general agreement that it was likely to lower the rate by that amount. But a series of data points showing worsening economic conditions has made some analysts believe a half-point cut is more likely — and perhaps even necessary.
While the unemployment rate, at 4.2%, remains relatively low by historical standards, it has climbed in four of the last five months — a pace that tends to occur before recessions. And while layoff activity remains subdued, hiring rates have ground to a halt, making life miserable for many people looking for a job.
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