Less Than One Rate Cut This Year?

The market is no longer fully pricing in a rate cut by the Federal Reserve this year. According to the latest interest rate swaps, bond traders now expect only 24 basis points of cuts for the year—essentially less than a full rate cut.

The reason? Soaring oil prices are fueling inflation expectations. Although Trump once again urged Powell to cut rates on social media today, a rate cut in March is almost impossible.

But whether this year will be as bleak as traders predict depends on the inflationary impact of oil prices and the state of U.S. employment going forward. And with Warsh set to take over in June, anything is possible.

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