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Investors Bet Fed Will Need to Cut Interest Rates Next Year to Bolster the Economy
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As the Federal Reserve prepares to meet this week, Wall Street investors are betting that officials will raise interest rates aggressively through the end of the year—and then turn around and start cutting them in six months.
The unusual wager reflects investors’ growing sense that the Fed is driving the economy into a recession as it tries to fight inflation, analysts said. At the same time, by constraining longer-term borrowing costs, it makes a recession slightly less likely to happen soon. That is a boost to riskier assets such as stocks, compared with a more traditional bet that rates wouldn’t boomerang so quickly.
Read more on wsj.comAbout this in other media
Bank of England raises interest rates to 1.75% in biggest hike in 27 years theguardian.com /2 years ago
Fed's Bullard sees more interest rate hikes ahead and no U.S. recession cnbc.com /2 years ago
Inflation will soar to ‘astronomical’ levels over next year, thinktank warns theguardian.com /2 years ago
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