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Some Think the Federal Reserve Won't Raise Interest Rates at All this Year


No interest-rate increases at all in 2019?

NEW YORK – Jan. 4, 2019 – Investors increasingly believe the Federal Reserve won't raise interest rates even once in 2019 – a sign of fading confidence that the U.S. economic expansion will continue at the stable pace the central bank foresaw just two weeks ago.

Fed-funds futures on Jan. 2 showed a 91 percent probability that the central bank's policy makers will finish the year with interest rates at or below their current level – a reversal from early November, when futures prices indicated a 90 percent probability that rates would end 2019 higher than they are now.

Futures even show a small chance that rates will fall this year, raising the possibility of a market shock or economic downturn by year's end.

Central bank officials already expect the U.S. growth rate to moderate this year as it faces slower growth abroad, waning government stimulus measures and the continued effects of the Fed's moves to drain its own monetary boost.

Growth would need to slow below the 2.3 percent rate Fed officials expected when they raised rates last month and penciled in two more increases for 2019 for investors' bets to prove correct, and recent market turbulence could make investor skittishness a self-fulfilling prophecy.

Source: Wall Street Journal (01/02/19) Kruger, Daniel; Timiraos, Nick

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