Waning Inflation Increases Likelihood of Rate Cuts

July 15, 2024 — Last week’s soft inflation data and recent weakening labor make it increasingly likely that the Fed will cut rates starting in late summer. Interest rates markets are pricing in a 94% probability of the first rate cut commencing in September with at least one more in November or December. From there, markets expect a rate cut once per quarter until the federal funds rate reaches a range of 3.50% to 3.75% in March 2026.