When will rates drop?
The big question everyone wants to know is when, or if, rates will resume their slide down. Despite the Fed’s recent hold, there are members of the central bank’s board who still want to see more rate cuts this season.
Michelle Bowman, in comments made Friday morning, said she still had three rate cuts penciled in for the rest of 2026. Christopher Waller said on Friday that he had planned to advocate for a rate cut this week until oil prices spiked. Still, he doesn’t see a reason to hike rates right now, and still thinks there will be rate cuts later in the year.
CME FedWatch isn’t as optimistic at the moment. Despite no signs from Fed members that rate hikes are on the way, FedWatch shows a 14.5% chance of a rate hike in April, and a 45.5% chance that rates end the year at least 25 basis points higher than they are right now.
Garg said that while he’s hopeful rates will move lower again, he’s not sure when that’s going to happen. But he’s optimistic that at some point, rates will start moving lower again.
“We have seen super sensitivity around the interest rates,” he said. “When the rates drop and come into the fives, the markets have to move. But of course, the rates have gone back up with the war. I think it’s anyone’s guess where the market will go over the next six months. A lot depends on what happens in the geopolitical situation we find ourselves in. In the long run, though, I do believe that interest rates will come down as inflation comes down.”
