• After an aggressive round of rate hikes that began in March 2022, the Federal Reserve has held rates steady at 5.33% since July 2023.
  • Despite hopes for cuts last year, expectations rarely match reality.
  • Benign inflation data released during the fall of 2023 shifted expectations for a first cut in early 2024, but the Fed continued to evade an action during the first quarter and inflation remained robust.
  • In March, Fed Chair Jerome Powell suggested the possibility remained for interest rate cuts in 2024, but anticipates fewer cuts than previously mentioned.
  • Based on the last 70 years of data, the zero rates that dominated much of the last 15 years were well below the long-term average of 4.19%.
  • The path forward for rates – and equity markets – is likely to remain uncertain and volatile.
  • For investors, however, away-from-zero rates and double-digit volatility have meaningfully enhanced options-based strategies such as those managed by Gateway since 1977.