History Shows Traders Get What They Want With Fed Rate Cuts
- Bloomberg analysis finds Fed eases when that’s 50% priced in
- That’s where things stand now heading into Sept. 18 decision
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As the age of the disruptive tweet lays waste to much of the market’s conventional wisdom, at least one truth holds: The Federal Reserve decides when to hike, and the market decides when to cut.
The past quarter-century shows that when Fed easing is at least 50% priced in days before a policy decision -- as it is for the Sept. 18 meeting and beyond -- the central bank has always reduced rates, according to data compiled by Bloomberg. U.S. President Donald Trump, who last month called for at least 100 basis points of cuts, may well envy such a track record.