Economics
Pause or Press On? Wall Street and Economists Drift Apart on Fed
- Economists ponder while traders doubt any Fed hikes next year
- Plunging share prices are tightening financial conditions
Photographer: Andrew Harrer/Bloomberg
This article is for subscribers only.
While Wall Street’s traders are betting against the Federal Reserve’s ability to raise interest rates at all in 2019 and are even starting to cast doubt on a December increase, economists are still debating whether the Fed will hike two, three or four times next year.
The market and economists are rapidly drifting further apart. That’s in the wake of a massive repricing Thursday by debt futures, to less than one full quarter-point increase in how much Fed policy tightening they see next year. This rapid adjustment came amid a swoon in global shares as fears of escalating U.S.-China trade tensions were rekindled.