--- title: Will the Fed Cut Interest Rates Soon? Wall Street Can't Make Up Its Mind description: What's the Federal Reserve's next move? Wall Street analysts are divided as to whether the Fed will hike interest rates more or cut them. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-03-29T17:49:04.000Z' modified: '2024-01-10T17:53:02.000Z' section: Economy and Politics tags: - News word_count: 622 canonical: https://money.com/will-fed-cut-interest-rates-soon/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Traders work on the floor of the New York Stock Exchange on Wall Street in New York City](https://img.money.com/2023/03/News-More-Interest-Rate-Hikes-Coming.jpg) After last week’s quarter-point [interest rate hike](https://money.com/fed-interest-rate-hike-march-2023/) amid a [meltdown in the banking sector](https://money.com/bank-failures-explained-questions-answers/), all eyes are on the Fed’s next move. But Wall Street experts are divided about what exactly that move might be — and whether, after nine consecutive rate hikes, rate *cuts* might be coming this year. It’s not clear which approach will serve the economy best. Higher interest rates slow down economic growth, which is important when the economy is overheating and consumer prices are rising too fast — like they have been for more than a year, with [above-average inflation](https://money.com/inflation-2023-expert-predictions/). High interest rates make it more expensive for banks to borrow from each other, and that extra expense trickles down to consumers, too. They also weigh on the prices of financial assets like [stocks](https://money.com/how-to-buy-stocks/) and [bonds](https://money.com/buying-bonds-great-investing-move/). The real problem is that if the Federal Reserve hikes rates too much or leaves them too high for too long, it risks damage to the economy. Then again, if rate hikes are paused too soon, the Fed risks falling behind in its battle with inflation. ## Recession could prompt rate cuts soon In a blog post last week, strategists from TD Securities said that while they believe a too-hot labor market will prompt the Fed to raise rates twice more (in May and June), the central bank will begin cutting rates at the end of the year as the economy enters a recession. “We maintain our call that rate cuts will commence at the December meeting,” the strategists wrote. Some think those cuts could come even sooner. “I predict the Federal Reserve will be cutting rates substantially soon,” Jeffrey Gundlach, chief investment officer DoubleLine Capital, [tweeted](https://twitter.com/TruthGundlach/status/1639106505348898817) last week. The market agrees: [Data](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html) from the CME FedWatch Tool shows a roughly 37% chance of a rate cut at the central bank’s July meeting, and a 63% chance of a cut at the September meeting. While conventional wisdom says that lower rates tend to give the stock market a boost, some have argued that the market's expectations of rate cuts are not actually a good thing. “Rate cuts would actually be negative for the stock market,” Todd Sohn, managing director of technical strategy at Strategas Securities, [recently told *Bloomberg*](https://www.bloomberg.com/news/articles/2023-03-23/wall-street-expects-the-fed-to-cut-rates-that-isn-t-a-good-sign). That's partially because rate cuts will be prompted by a struggling economy, which could very likely prompt further losses for stocks. Cuts could hit growth stocks especially hard, Sohn added. ## ‘Sticky inflation’ could mean no rate cuts Some experts, on the other hand, believe that those market expectations are out of line with the Fed’s likely path, in large part due to stubbornly high inflation. In a [client note](https://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20230327-recession-but-no-central-bank-rescue.pdf) this week, strategists from BlackRock said they don’t anticipate any rate cuts this year. “That’s the old playbook when central banks would rush to rescue the economy as recession hit,” they wrote. “Now they’re causing the recession to fight sticky inflation — and that makes rate cuts unlikely.” “We’re still a long, long way” off from the Fed’s 2% inflation target, Jay Bryson, Wells Fargo Securities chief economist, [recently told CNBC](https://www.cnbc.com/video/2023/03/23/fed-may-stop-raising-rates-but-dont-expect-rate-cuts-soon-says-wells-fargos-jay-bryson.html). As a result, he anticipates that the central bank will keep rates high “for a long period of time” despite other pressures on the economy. Federal Reserve chair Jerome Powell echoed this view in a press conference following the rate hike announcement last week. Given the hot labor and slow reduction of the inflation rate, “participants don’t see rate cuts this year,” he said. “They just don’t.” ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/will-fed-cut-interest-rates-soon/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Federal Reserve", "item": "https://money.com/federal-reserve/" }, { "@type": "ListItem", "position": 4, "name": "Will the Fed Cut Interest Rates Soon? Wall Street Can't Make Up Its Mind" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/will-fed-cut-interest-rates-soon/#webpage", "url": "https://money.com/will-fed-cut-interest-rates-soon/", "name": "Will the Fed Cut Interest Rates Soon? Wall Street Can't Make Up Its Mind", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-03-29T17:49:04.000Z", "mainEntity": { "@id": "https://money.com/will-fed-cut-interest-rates-soon/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/will-fed-cut-interest-rates-soon/#breadcrumb" }, "dateModified": "2024-01-10T17:53:02.000Z" }, { "@type": "NewsArticle", "headline": "Will the Fed Cut Interest Rates Soon? Wall Street Can't Make Up Its Mind", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/03/News-More-Interest-Rate-Hikes-Coming.jpg", "width": 2880, "height": 1920, "caption": "News-More-Interest-Rate-Hikes-Coming" } ], "author": [ { "@type": "Person", "name": "Sarah Hansen", "url": "https://money.com/author/sarah-hansen/", "@id": "https://money.com/author/sarah-hansen/#author", "description": "Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes.", "image": "https://img.money.com/2021/10/a_sarah-hansen.jpg?quality=85&w=400&h=440&crop=1", "email": "sarah.hansen@money.com", "alumniOf": "Northwestern University, New York University", "sameAs": [ "https://www.linkedin.com/in/sarah-m-hansen/" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2023-03-29T17:49:04.000Z", "description": "What's the Federal Reserve's next move? Wall Street analysts are divided as to whether the Fed will hike interest rates more or cut them.", "abstract": "What's the Federal Reserve's next move? Wall Street analysts are divided as to whether the Fed will hike interest rates more or cut them.", "@id": "https://money.com/will-fed-cut-interest-rates-soon/", "inLanguage": "en-US", "dateModified": "2024-01-10T17:53:02.000Z", "editor": [ { "@type": "Person", "name": "Brad Tuttle", "url": "https://money.com/author/brad-tuttle/", "@id": "https://money.com/author/brad-tuttle/#author", "description": "Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals.\r\n\r\n", "image": "https://img.money.com/2014/01/Brad-Tuttle.png?w=226&h=247&crop=1", "alumniOf": "Columbia University School of Journalism, MS", "sameAs": [ "https://twitter.com/bradrtuttle", "https://linkedin.com/in/brad-tuttle-834b225" ] } ], "wordCount": 622, "keywords": [ "News" ], "about": [ { "@type": "Thing", "name": "Political economy", "sameAs": [ "https://en.wikipedia.org/wiki/Political_economy" ] }, { "@type": "Thing", "name": "Federal Reserve", "sameAs": [ "https://en.wikipedia.org/wiki/Federal_Reserve" ] }, { "@type": "Thing", "name": "Interest", "sameAs": [ "https://en.wikipedia.org/wiki/Interest" ] } ] } ] } ```