Timiraos: Fed unlikley to talk about rate cuts and perhaps may not for several months

<p>The Fed decision is on Wednesday and WSJ Fedwatcher Nick Timiraos is out with his latest. Here's the key passage:</p><blockquote>Fed officials aren’t likely to entertain serious conversations about
when to cut rates this week—and potentially for several months unless
the economy weakens more than expected. </blockquote><p>The market is fully priced for a May 1 cut and about halfway there for the March 20 meeting. Those odds have declined since Friday's non-farm payrolls report.</p><p>The report hints at something that market watchers have been eyeing for months: The Fed's history of cutting around six months after the final hike.</p><p>This is a conversation that's been ongoing since before the Fed even finished hiking and I wonder if too many market participants are leaning too hard on history. That said, betting against history hasn't been a great bet.</p><p>Timiraos hints at the final debate:</p><blockquote>One camp says that getting inflation down from a high of 7.1% last year
to 3% in October is going to prove much easier than lowering it from 3%
to the Fed’s 2% target. That is because most of the drop so far has
reflected the unwinding of pandemic-related bottlenecks and worker
shortages….Another camp doesn’t assume the last mile will be particularly difficult.</blockquote><p><a href="https://www.wsj.com/economy/central-banking/federal-reserve-cutting-interest-rates-when-4a910883?reflink=share_mobilewebshare" target="_blank" rel="nofollow">Read it at the WSJ</a>.</p>

This article was written by Adam Button at www.forexlive.com.