The Market Is Pricing in Another 200 Basis Points of Rate Cuts by the End of 2025. Is That Too Much?

The Federal Reserve recently lowered the target range of its federal funds rate by 50 basis points to a range of 4.75% to 5%, much to the delight of the market, which is now trading at or near all-time highs. The market's enthusiasm is tied to the estimate that this is just the beginning of the Fed's rate-cutting campaign and that it could extend through the remainder of this year and 2025.According to the CME Group's FedWatch tool, which looks at 30-day future prices on the federal funds rate to track the probabilities of changes, slightly more than a quarter of traders (as of Sept. 25) expect to see the federal funds rate drop into a range of 2.75% to 3% by the Fed's December 2025 meeting. That implies another potential 200 basis points of interest rate cuts over roughly the next year and three months.Is the market getting ahead of itself? Let's take a look.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool