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How many Fed rate cuts this year?
This is a market on the expected number of Federal Reserve interest rate cuts occurring within the current calendar year.
Event Details
Total Volume: $41.6M
24h Volume: $170.2K
Total Liquidity: $655.3K
Markets: 7
Event Ends: 12/31/2024
Event Analysis
Summary
The Federal Reserve's interest rate decisions in 2024 represent a critical juncture in monetary policy as the central bank balances moderating inflation with economic growth concerns. Based on recent FOMC projections and market expectations, there is strong consensus that multiple rate cuts will occur in 2024, with most indicators pointing to 3-4 cuts total.
The March 2024 FOMC projections suggest a federal funds rate of 4.6% by end of 2024, down from the current 5.25-5.50% range, implying approximately 75-100 basis points of cuts. Market sentiment and economic data, including cooling inflation and stable but moderating growth, support this trajectory. However, the timing and pace of cuts remain subject to incoming economic data and potential external shocks.
Analysis
Economic Background
- Current federal funds rate: 5.25-5.50%
- Inflation trending down but still above 2% target
- GDP growth projected at 2.1% for 2024
- Unemployment rate stable around 4.0%
Analysis of Potential Outcomes
0-2 Cuts (0% probability)
- Extremely unlikely given Fed projections and market pricing
- Would require significant inflation resurgence or economic overheating
- Contradicts FOMC dot plot and official communications
3 Cuts (27.8% probability)
- Aligns with Fed's base case scenario
- Supported by March 2024 FOMC projections
- Conservative pace allowing for data monitoring
- Most likely if inflation declines gradually
4 Cuts (70.8% probability)
- Currently most favored by market pricing
- Supported by cooling inflation and growth moderation
- Matches historical pace of easing cycles
- Provides sufficient accommodation without being aggressive
5+ Cuts (<2% combined probability)
- Would require significant economic deterioration
- Possible in recession scenario
- Limited support from current data
- Against Fed's measured approach
Key Factors to Watch
-
Inflation Metrics
- Core PCE trends
- Wage growth
- Consumer expectations
-
Economic Growth
- GDP data
- Employment reports
- Consumer spending
-
Financial Conditions
- Market stability
- Credit conditions
- Global economic factors
Recent Developments
- March 2024 FOMC meeting maintained rates
- Updated projections show 3 cuts as baseline
- Market pricing shifted toward 4 cuts scenario
- Labor market showing resilience
Prediction
Based on comprehensive analysis, I predict 4 rate cuts in 2024 with 65% confidence, while 3 cuts remains a strong alternative scenario at 30% probability. The likelihood of either fewer than 3 or more than 4 cuts is minimal. First cut likely in June 2024, followed by measured quarterly reductions if economic data supports.
Will Fed cut interest rates 0 times in 2024?
Yes:0.0%
No:100.0%
Will Fed cut interest rates 1 time in 2024?
Yes:0.0%
No:100.0%
Will Fed cut interest rates 2 times in 2024?
Yes:0.0%
No:100.0%
Will Fed cut interest rates 3 times in 2024?
Yes:30.0%
No:70.0%
Will Fed cut interest rates 4 times in 2024?
Yes:65.0%
No:35.0%
Will Fed cut interest rates 5 times in 2024?
Yes:4.0%
No:96.0%
Will Fed cut interest rates 6+ times in 2024?
Yes:1.0%
No:99.0%
Confidence: 8/10
Reasoning Score: 9/10