It wonât get much easier to predict the next move ??/
đ§§Federal Reserve Chair Jerome Powell is known for providing clear signals about the central bank's next interest rate moves to avoid market volatility. However, this week, Wall Street was largely in the dark about the size of the expected rate cut from the Fed on Wednesday.
The Fed ultimately surprised markets with a jumbo half-point cut, a move traders did not anticipate just a week earlier. Most were expecting a more standard quarter-point cut, as indicated by fed funds futures, which gauge market expectations for upcoming Fed decisions.
By Friday, only four days before the Fed's two-day policy meeting began, the odds of a half-point versus quarter-point cut were evenly split at 50-50. By Monday, expectations leaned slightly toward a half-point cut, although less decisively than usual so close to a meeting. This underscored the uncertainty surrounding the Fed's decision.
The traders' indecision likely mirrored the internal uncertainty among Fed officials ahead of the meeting. However, this does not necessarily mean that future rate decisions will be equally unpredictable.
