While the U.S. Federal Reserve (Fed) appears to be nearing a point where it considers pausing its interest rate hiking cycle, market participants are already pricing in the timing and magnitude of future rate cuts. Specifically, the market appears to be pricing in cuts to the Fed’s short-term policy rate starting in the second half of this year and continuing into 2024 and beyond, with tradable forward rates going from just under 5% by mid-2023 to about 3% in only 18 months’ time. This pricing is garnering attention from market participants and pundits alike, fostering a debate about what type of economic outcome – ... (full story)