Cease-fire Odds for 2024 Rate Cuts Jump to 43%
The odds of at least one Federal Reserve interest-rate cut by December jumped from 14% to 43% on Wednesday. This shift follows President Trump's announcement of a two-week cease-fire with Iran, contingent on the reopening of the Strait of Hormuz. The reopening of the strait removes a blockade that caused the worst-ever energy supply disruption. Investors are betting that the resolution of this disruption reduces the risk of reheating inflation, which remains above the Fed's 2% goal. Federal Reserve officials had previously projected one rate cut this year at their March 17-18 meeting, noting that substantially higher oil prices could reduce household purchasing power and tighten financial conditions.
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