Markets are counting on the Fed to head off recession with sizeable interest rate cuts

Markets are counting on the Fed to head off recession with sizeable interest rate cuts


Key Points
  • In the market’s eyes, the Fed finds itself either poised to head off recession or doomed to repeat the mistakes of its recent past.
  • “No recession today, but one is increasingly inevitable by year-end if the Fed fails to act,” said Steve Blitz, chief U.S. economist at TS Lombard.
  • Traders are pricing in a half-point September cut, followed by aggressive easing that could lop 2.25 percentage points off the Fed’s short-term borrowing rate by the end of next year.



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