Federal Reserve Rate Cut Probabilities: rate cut expectations have declined notably this week. Investors are pricing in only a 39.2% probability of a September rate cut, 37.4% in October and 57.8% in December.?
My estimate of the short-term neutral rate is 3.5% vs. the Fed's estimate of 3%. This information implies a long difficult road to the neutral rate.?
The new tariff regime announced last night will not impact the US economy until later this year and mostly next. Note how the rate cut probabilities in 2026 have declined with only the June 2026 meeting being priced in.