Rate cut odds have been rising despite relatively strong CPI data. The Fed meets December 18.
According to CME Fedwatch, there is an 85.8 percent chance of a quarter-point cut at the December 18 Fed meeting.
However, there does not seem to much of a reason to cut rates and even less of one if one believes CPI estimates.
Bloomberg Econoday CPI Consensus
The Bloomberg Econoday consensus CPI estimate is 0.3 percent month-over-month and 2.7 percent year-over-year, up from 2.6 percent.
I think there is a decent chance we do much better (lower) than 0.3 percent month-over-month, but that will largely depend on rent and Owners’ Equivalent Rent.
Target Rate Probabilities for March 2025
Are We No Longer Data Dependent?
Looking ahead to March, the market expects two more cuts in January and March.
Based on current inflation data, the Fed should not be cutting at all. But tomorrow is another day.
If the data does not warrant these cuts, but the Fed cuts anyway, expect yields on the long end to rise in revolt.
Every error in economics stems from the wrong conclusion that banks are intermediaries, loaning out the deposits of its saver-holders. The game is perpetrated by the Amercian Bankers Association. The ABA has long bought its advantageous legislation.
The last time that inflation adjusted corporate profits have been this high was the 1920s, no joke. Why on earth are rate cuts needed?
Because the greedy pigs want more, and they want yours.
Because the full economic effects of monetary policy take 1-2 years to be realized?
So they are considering where the US will be in May 2026?
Inflation will subside after 3 million federal government parasites lose their paychecks.
Throw in the social security and medicare socialists and you’re talking real money and real change. It is refreshing to see so many politicians now talking the third rail of politics. Maybe this time will be different….
Nothing off limits.
Social Security and Medicare are off limits to Trump & DOGE. Only Congress can make changes to those.
How about the Fed. retiree pension payments? Are those on the block, too?
All of it. Yes. Go back to work
Except then you’ll have 3 million more on UI/Welfare. Only now they’ll be doing no work to get that money. So those you fire have to have jobs that are a net negative over doing no work otherwise we are worse off with all those people on UI/Welfare.
Only a part of DOGE is firing employees. A larger part is eliminating waste (like $300 hammers and overpaying for rent on buildings etc). Plus all those you do fire, you need to retrain and find private sector jobs for in order to turn it into a net positive for the economy.
Well, yeah, but we’ll get to cheer their suffering and jeer at them, so it comes out even.
Which economy did best in 2024?Which economy did best in 2024? (archive.ph)
Interest is the price of credit. The price of money is the reciprocal of the price level. The FED is targeting the wrong metric. The FED should target bank credit (loans/investments = deposits). The FED should reinstate reserve requirements against deposit liabilities.
Even the lowly janitor sometimes has a good idea. The FED may skate through some interest rate reductions due to a fall in short-term money flows, consumers spending too much on X-mas and sucking up in early 2025.
I hope they hold.
Low interest rates have been the problem, not the solution.
Inflation must be reduced as priority no. 1. Its a theft of everything across the board.
They shouldn’t have cut a single time. Mistakes abound. Agree
Government cannot afford to pay what they owe, not even pay the interest on the debt. That is why the fed cuts interest rates.
In the meantime SpaceX’s valuation has reached $350 billion.
Americans should thank God for Elon Musk daily
Cultist.
He is a realist.
Standing up for free speech alone is paramount. Then everything else.
Indubitably. Those who have shorted Elon in the past have understood their error. They never understood that he made physical objects and not just software or finance. It was their unmaking.
He bought existing companies with daddy’s money, and got lucky. The only thing he had a real hand in was the cybertruck, which is turning out to be the 21st century Edsel.
It is very difficult to keep a Ponzi scheme going without cheap money.
Duh.
Here is link to core cpi index.
https://www.investing.com/economic-calendar/core-cpi-index-1226
Not a chart conducive to Fed easing as there is no relief demonstrating Fed is achieving its’ goals.
Bk.of Canada up this morning slated for 50 Basis. I think they will only go 25 Basis.
Will be finding out in 7 minutes
BOC went with 50
Canadian dollar is trash. They’ve ruined their country by unfettered immigration. Now they want a do over.
That is the play on Cad., ousting Trudeau
BOC statement justifies 50 Basis by saying excess capacity in economy and they are being supportive of Growth.
Canada has a 1 to 3% inflation target range. Something to be aware of going forward as trial balloon for other major CB’s to fudge their 2% targets.
Trump will berate J Pow into lowering rates, he’ll threaten to kill the remaining Grateful Dead members if Powell does not do as he is told by the immune one.
If anything the 50bps cut in Sept was an act to help Harris. People saw through it though
LOL, either clueless or disingenuous
Jerome Powell is Republican and chosen for Fed chair by Trump previously
Jerome Powell does not like Trump. Doesn’t matter he picked him. Biden re-appointed him. He tried to get Harris elected. Failed
Just another cultist, selling the cult.
This sound like Powell likes Trump. LOL….Sorry you don’t get your own facts. Just your bad opinions
https://www.cnn.com/2024/11/08/economy/powell-trump-fed-tension/index.html
That article just shows Powell – an attorney by trade – does not want Trump to try to break the law again LOL
Keep ’em coming. I find your ‘facts’ very entertaining in a bored, middle-of-the-week-lunch-hour type of way
Shh.. they’re to be encouraged for providing any sort of evidence at all.
CPI data out at bls.gov and aside from energy down, the rest is all up.
“It’s turtles all the way down and inflation all the way up!”
Yes the Biden inflation monster is going to be difficult to get rid of. Might take a few terms.
True to form, you whine about Biden and democrats endlessly, get some help! lol. Biden is living rent free in your mind and he’s barely functional himself. He is far too powerful for you.
Trump/GOP is going to own it all in 39 days. If they don’t take us to the promised land, it’s 100% failure. Mid-terms only two short years away….
Fixing what is broken. After someone burns down the house, saying you own the tinders is silly. Trump will be great.
Lol, the pyromaniacs are in charge now. Just wait till those tariffs go into play and the cheap labor is kicked out. 100% ownership.
You realize the Fed did a study of the tariffs and found they are not long term inflationary right? Look it up….and that cheap labor takes more in services than they give back in labor. Or do you want no border at all?
borders only exist in your mind. A monarch butterfly migrates to and from canada to mexico and no one is bothered. Same for birds or other of god’s creatures.
A human being wants to do the same thing and you are outraged.
Get help for your mental illness.
So no border then. Got it. Strange how no one agrees with you. Countries don’t exist without borders.
I exist with multiple homes in multiple states and multiple countries. I don’t see borders, I see profits and true freedom.
I could care less what anyone else thinks, that should be obvious to you by now.
Biden lives rent free in your head. You’re obsessed.
But I thought we were already in a recession!
its Time for second recession.
The PayPal Mafia is taking over America’s governmentAmerica’s right-wing tech bros are celebrating Donald Trump’s victoryhttps://archive.ph/A5CwK#selection-979.0-983.69
Thanks.
Safe travels
Can anyone find the INTEREST ONLY being paid on our Current DEBT? I am traveling today.
Past 1 trillion in interest in 2023
WHOA!
Spending one dollar per second, it would take twelve days to spend $1 million. It would take more than 31000 years (31709.792 years) to spend one trillion. The deficit presently stands around $1.5 Trillion per year. If you were alive when Christ was born and you spent $1 million every single day since that point, you still would not have spent $1 trillion dollars by now – you would have spent about $734 Billion.
or, if Jesus never existed, you’d have spent ZERO
LOL. It is just a calc. Let’s go with CAVEMEN.
https://usadebtclock.com/
https://think.ing.com/articles/debt-dynamics-look-scary-policy-needs-to-be-effective-or-else/
Unfortunately they have over a Month, to screw things up royally, and don’t think they won’t try as hard as humanly possible to do so. DOGE will help tremendously, but time is on their side at the moment, again unfortunately…
I want to hear what tune many (most?) people will sing if, in fact, life grows a lot more fair, in a hurry. A paraphrase of Jefferson, I think: I tremble when I think that perhaps God is just.
Trump will never get the credit he deserves. Not with the media the way it is
“Time Is On My Side” by Mr. Meade
I thought they would be shooting for .50 at minimum, and don’t rule that out just yet. I am not at all surprised by this. Heck, if they thought they could get away with it, they would be shooting for A 1.0 BP Cut!
Look out for the .50, and hopefully they will settle for .25, but it’s coming. We cannot stop it, They desire it more than anything right now, and there in “Power & Control” so it will be…
Yet another reason Never to trust Democrats, not to trust the Democrat (lack thereof) Leadership, and always be looking over your shoulder for the next sly, underhanded, BS move as they hang on for dear life until 1/20! After that however, they will be exposed and will have to face the consequences of there silly stupid decision making, their lies, and manipulation, and most of all there corruption I would guess, but we shall see.
What? The Fed (in charge of increasing/decreasing the Fed funds rate) is an independent agency.
But even if you believe in conspiracy theories (against Democrats), Jerome Powell is a staunch Republican and chosen as Fed chair by Trump previously
Fed flows with who’s in charge and the Teams in place to watch over them. The outcome varies by President and Party over the years.
The current party obviously lies a lot to push a false narrative to misrepresent and gain favor over those not paying attention. To a degree unlike I have ever seen.
They all do to some degree as necessary to get things done, but legit and signed off (your target) on. It’s when it goes beyond governing and controlling and manipulating or… I won’t say it!
Trump chose Powell based on Mnuchin’s advise, and he lived to regret it. The dotard never thinks, he just shoots from the hip based on his gut feeling.
He lacks the equipment for thinking, but he sure can lie.
I thought they would be shooting for .50 at minimum, and don’t rule that out just yet. I am not at all surprised by this. Heck, if they thought they could get away with it, they would be shooting for A 1.0 BP jump!
Look out for the .50, and hopefully they will settle for .25, but it’s coming. We cannot stop it, They desire it more than anything right now, and there in “Power & Control” so it will be…
Yet another reason Never to trust Democrats, not to trust the Democrat (lack thereof) Leadership, and always be looking over your shoulder for the next sly, underhanded, BS move as they hang on for dear life until 1/20! After that however, they will be exposed and will have to face the consequences of there silly stupid decision making, their lies, and manipulation, and most of all there corruption I would guess, but we shall see.
I keep saying this: Powell is desperately looking for any justification to cut interest rates because of the cost of interest that the USA faces due to our constantly escalating borrowing and debt.
Let’s hope the DOGE crew can put an end to this insanity.
I agree 1000%!
And if true even to say 20-30% of his decision making, it’s extremely unfortunate that he doesn’t have the balls to be frank with Congress, Trump & the American people.
The Fed seems to be always speaking in coded messages.
Let’s dream that ALL spending is STOPPED – – all of it. We are so over-loaded with Debt that there is NOTHING (NADA) that can be done to NOT make INTEREST RATE MOVES LOWER to handle just the INTEREST ALONE. I do not have the numbers handy here. I will go find out using AI (oh, sure!). HA.
The FED should treat the system like banks and not non-banks. They should do as Milton Friedman advocated, place reserve requirements on all deposits in all banks. Then it should raise reserve ratios to absorb the deficits.
The DOGE crew will have to move slower than people hope and might have far less change on spending that people imagine.
For example if they came in on day 1 and fired 1 million workers saving X amount of dollars on salaries, they’d suddenly find that the expenses paid out by Unemployment Insurance + Welfare would rise by Y because those 1 million workers would be collecting those benefits. Only now, you’d get zero work from those 1 million workers instead of whatever they’d been doing. So the calculus is: Is X amount on government salaries for X1 amount of work better/worse than Y amount on UI/Welfare for 0 amount of work.
In other words, it’s going to take time to transition all those useless government workers into productive private sector jobs.
DOGE is a smokescreen.
THOSE expenses would come out of state coffers. The Federal budget would not be responsible for these costs.
US Disability Data hit a new all time high in November breaking out from the prior high in June 2023. November saw an increase of 787k over October.
https://t.me/EdwardDowdReal/1124
They only get $923 a month on SSI. They are hardly getting away with anything. 1/3rd of the WV pop is on SSI.
I wonder how many SSI payments are collected by scammers who, with help from doctors on the take, manufacture excuses why they can’t work and claim great pain that they don’t really have?
I have known people who spent their lives partying and surfing and goofing off to the full extent of their ability, damaged themselves along the way, and now collect SSI disability. Hardly a good sample statistically, but still ….
Of course, there are some scammers; there always will be whether for government programs or lazy workers
But SSI fraud is probably only so big. All SSI disability payments and claims must be OK’ed by a doctor. I know complicit doctors exist (I’ve been an occasional consultant for federal AG claims against such cases), but there’s a very heavy price. If you assist such fraud, you lose your medical license so the majority are not willy-nilly false claims filings
It’s a lawyers’ game. They do nothing and get paid.
The question is HOW big? If our bleeding heart society refuses to dig into whether these applicants are truly qualified or not due to laziness or lack of resources to do so, then we will never know the true extent of the problem.
It’s the same with disabled parking placards here in CA. In the rare times when an investigation is conducted, they always find a high percentage of fraud. People get doctors to sign-off on applications for these by claiming “knee pain” when walking up a hill or something equaling foolish.
Scuttlebutt has it that there is a lot of cheating in this program by people who just don’t want to work. But we really have no idea how big the problem is.
Why is 923 acceptable to you? Fraud is fraud
I think we also need to remember ACTUAL disabled people have to live on just $923 a month. And you cant make any money legally in addition or Social Secuity (which runs SSI) or SS will find out and dock your 923. Im an SSI payee for a lady (thru me to her) and whenever she tries to work (to get money faster), her SSI payment gets reduced. $923 isnt much — doesnt even pay rent in Chicago.
Why do we have to provide support for people who can’t take care of themselves in life?
If you can’t support yourself in life, then that is YOUR problem, not societies.
Who thinks these massive disabled numbers … are not impacting the job reports?
Someone who has cancer or a heart attack from the Covid Vaccines… and cannot work = a job opening
Illegals qualify for receiving it.
You’re spending too much time on ZH
https://www.ssa.gov/pubs/EN-05-11051.pdf
Well this will prove once and for all that Chairman Burns is just talking about controlling inflation while he cuts rates and increases the money supply causing yet more inflation. It’s actually just turning into some kind of sick, twisted joke. Why anyone would buy a long dated treasury bond is beyond me. Talk about foolish. The Fed is by its actions telling the people that he wants inflation to run red hot and that he doesn’t care at all about the suffering that leaves in its wake. Don’t use the labor market as an excuse either because by historical standards unemployment is very low. Stock market is on fire to boot so maybe the goal has become to break the financial system by providing way too much of a ‘good thing”.
You have to think more now of how a dictator benefits from these moves, not a typical president.
Maybe the Fed is imperfect, but on a basically middle-of-the-road trajectory?
Some people (like you) think the economy – based on Fed actions – is on the path for “inflation to run red hot”.
Some people (like Mish) believe the economy is/was in a recession and employment is dropping (according to BLS Household surveys).
So maybe we’re actually in a middle-of-the-road situation so the Fed is moving slowly? One quarter-point hike in one month won’t affect any one person materially in the US. It takes big movements from the Fed (suddenly or over time) to materially affect the economy and peoples’ lives
Mr. Market is quite clear and has been clear. The FED is going to cut rate by 25 basispoints. After that tthere will be – at least – one more rate cut.
No, this has nothing to do with “Inflation” of “Inflation expectations”. One can follow what the FED is going to do by following Mr. market.
Mr. Market was forecasting cuts throughout 2022 and 2023 that didn’t materialize. There’s no reason to trust Mr. Market’s expectations now, either.
Ah, but Biden was in charge the last 4 years. And he tried to capture the love (and votes) of the old people who like interest. Sadly the strategy failed.
The President doesn’t set interest rates
By job title and responsibilities it is the Fed, but by chance, let’s say if they wanted to, and Powell and Harris/Biden agreed to it, could they ask Powell politely to Cut .50BP and it would be done?
I am talking hypothetically of course, but could it happen is my question?
There is some history. Nixon leaned on Fed Chair A. Burns to go soft, followed by oil price shocks (resulting in 1970s inflation) and Trump leaned on (his appointee) Powell in 2018 or ’19 to do so (followed by the pandemic supply shock, and the gov. responses, resulting in 2020s inflation). Trump has consistently pushed for loose credit from the Fed, I assume to jack up stock prices and headline numbers in the economy. Finally the inflation risk of that burst forth, when a few unexpected things piled on (and Trump and Biden and Congress and the Fed flushed money and credit into the economy to deal with that). Fed personnel learn this stuff too, sometimes on the job, as Powell did. But now, again, one wonders what he is about.
Don has no trouble with lots of borrowing to get what he wants — even better if other people have to pay it back.
6.7 trillion last time.
The 1st qtr. of 2020 was going to be negative regardless of C-19.
Politely nothing
Oh please. No one is THAT uninformed.
Ah yes! Your theory works until it doesn’t. Some theory.
The FED is forced to keep the short end low to finance the Federal debt so we will see the high ten year
I would argue that the Fed is forced to keep rates high to force U.S. Govt to fix the unsustainable, inflation-generating and historically unprecedented deficit spending binge, before a real debt crisis destroys the Fed’s primary product, the U.S. dollar.
I don’t believe the Federal Reserve’s task is to finance the U.S. government’s debt. The U.S. government is, as usually, currently owned by major financial interests, and the government’s task is to maximize their profits (accomplished) without inflation destroying the real value of those profits (current major risk).
You may be right but I do think the Fed is keeping the short debt rates low so the U.S. Treasury can roll their short term debt at low rates while Mr Market is pushing up the 10 year plus in response. It would be nice to check the mix of outstanding Treasury debt and see what percentage is short term and if the mix is shifting, I will have to take a look tomorrow
You probably want to check before you write instead of vice-versa
They are going to zero in 2025. You cant service $35 trillion in debt with ANY interest rate. Trump also wants to borrow several trillion more for his vanity spending, and he certainly doesnt want HIS Federal money spent on interest for borrowings for past government spending. This is gonna be a wild 4 (4-8-12) year ride.
JM&J give it a rest, I would say the last 4 years was also a wild ride. And to your earlier comments..Biden rates were high for only 1/2 of his presidency, not the entire time, nor does he (or the next guy) set them. Vanity spending, as opposed to the last 4 years of shipping it to Ukraine or funding the illegal invasion from the south, flying them all over tarnation. Does the guy live in your head 24×7? Dictator. Vanity spending. Trump. HIS federal money.
I guess it is set on the Repeat setting in some endless tape loop.
How’s about we stick to the topicof the post which is the FFR interest rate policy, CPI etc?
It should be concerning to have interest rates decreased while inflation is still running hotter than their alleged desired baseless goal of 2%. My property tax bill just arrived–up 10.6% YoY. Other than highly variable gasoline, I see no relief on the price front.
The cost to service our past debt is extreme but it should serve as an urgency to reduce the deficit. And not sure why the federal interest is any more special of a burden than the massive inflation that is applied daily to 330M+ Americans in every transaction. Get inflation under control, then gradually lower rates. Then you can roll the debt. There is nothing I can see in the CPI, PCE, Core-this and Prices-excluding-that that tells me it’s on the right permanent, lasting trajectory. Didn’t the ISM Services diffusion index Mish posted the other day show prices rising, faster, and had been rising for like 90+ months?
Maybe we should stick to the topic in the post and ask whether the Fed has any credibility left if they intend upon lowering rates when that sticky 90+ months of rising services prices persists and at the moment is accelerating not decelerating. Just think..not one month in the last 7 1/2 years did that index show even a flat MoM change.
The Fed continues to do us dirty. We can’t seem to get Congress to balance the budget and stop spending us into inflation, you’d think the damn bankers would apply heavy interest rate pressure to arrest it.
A paragraph or two will better ensure what you write gets read. 🙂 Remember you are writing for your audience, not for yourself. And I cant get my mom to believe it, but she is richer thanks to Biden than she ever has been in her life.
Depends on your POV. Mish and others have been predicting/relaying evidence of a recession for some time. If that’s true, shouldn’t the Fed be lowering interest rates?
Powell did everything he could to increase the velocity of money. Powell eliminated the 6 withdrawal restrictions on savings/investment type of accounts. He eliminated reserve requirements which shifted the money stock towards more transaction’s based accounts.
And the FRB-STL also has the right idea:
https://files.stlouisfed.org/files/htdocs/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements.pdf
The fed has long favored wall street over main street. Do not seeing this changing in the future. Pour more fuel on the burning fire.
The federal government can only operate on a 0% FED Funds Rate (or negative), forever.
End of discussion.
End the FED!
Caught between rock and a hard place. Who is going to buy US debt when it pays zero? The remaining option is FED printed money buys treasury debt, a thinly veiled train wreck.
Zero percent bonds have the face value rise in the opposite direction. I think you know that. 🙂 Monetizing the debt affects the population, not the leaders.
Zero yield on newly minted bonds pushes up the price of existing bonds. That does serve to buy new government debt.
Shades of the “punch bowel”.
For the circular flow of income to work, you need high real rates of interrest.