How Likely is it For The Fed to Cut Rates?

A study from WalletHub found that 76% of people support a cut in the Federal interest rates, and the probability of a rate cut increases as 2019 continues.

WalletHub states that there is a 23% chance the Federal Reserve will reduce interest rates on June 19, but the probability of a rate cut increases to 87% by July 31 and 97% by September 18.

“The Fed probably won’t cut its target rate at its June meeting,” said WalletHub CEO Odysseas Papadimitriou. “But future pricing indicates we’re almost certain to see a rate reduction this summer or early fall.”

The Fed has increased interest rates nine times since 2015 with no decreases. Also, 49% of people surveyed said they would feel “more confident” in the economy if interest rates dropped.

Interest-rate increases have taken the Fed's target rate from nearly zero in December 2015 to between 2.25%-2.5%. The Fed hasn't reduced interest rates in nearly a decade. 

“The Fed has more economic data than anyone, so if they are simply reacting to market conditions, there’s no reason to question them at this point,” Papadimitriou said. “However, the Fed must make it very clear that the move is not politically motivated.”

Papdimitriou said a rate cut would benefit those with a credit card, as WalletHub projects people will save around $1.6 billion on interest.

“If reducing rates delays the next recession, it would help all of us by giving us some extra time to save up for leaner times,” Papdimitriou said. “Plus, a drop in rates would put American businesses and consumers in a better position to withstand an escalation in the trade war with China.”

Papdimitriou added the Fed “completely miscalculated” how serious President Donald Trump was about suing tariffs as a negotiating tool with China and other countries.

Sixty-seven percent of those surveyed believe the Federal Reserve knows how to grow the economy better than President Trump.