Although a strong economy has changed expectations about the timing and magnitude of interest rate cuts, we still see room for the Federal Reserve to cut by three-quarters of a point this year. In the past few months, expectations about the timing and magnitude of interest rate cuts by the Federal Reserve have changed dramatically. Earlier in the year, the federal funds futures market had priced in as many as six 25-basis-point1 cuts to the federal funds target rate, suggesting that the upper bound of the rate would fall from 5.5% to 4.25% this year. Now that number is down to three, implying a year-end federal funds ... (full story)