Waking up and looking at Reuters, the probability of a rate cut in June has really increased.
Out of 101 economists, 60 are betting on a 25 basis point cut before the end of June, bringing the rate to 3.25%-3.5%. It’s not 'likely', it’s 'already over half'.
(In the middle)
In simple terms: taking action in the first half of the year has basically become a consensus.
This is not a crisis-style rate cut, but a preemptive one. A 25 basis point cut is gradual, not the kind that scares people with a 50 basis point cut. Powell is playing this game steadily.
Why? Inflation is not completely dead, but employment is starting to loosen. There’s no need to push further. It’s just right to give the market a step down.
But don’t forget, there are still 41 people who haven’t nodded. These folks are waiting for next week's PCE and non-farm data. If the data is strong, the rate cut will be pushed back; if the data is weak, it’s a done deal for June.
(At the end)
The current question is not whether to cut rates, but whether the market has already priced in this expectation too much.
When the day actually comes, will you take a rebound, or will you catch the falling knife?
Let’s chat in the comments.
