Fed Easing Monetary Policy Into An Economic Boom?

In the past, most of the Fed's monetary easing cycles were triggered by financial crises that quickly morphed into economy-wide credit crunches, which caused recessions. Since 1960, the Fed reduced the federal funds rate (FFR) by more than 500 bps during the average easing cycle (chart).

So it's no wonder that the FFR futures market is increasingly expecting a 50bps cut on Wednesday, followed by another 200bps of cuts over the next 12 months (chart). However, most previous easing cycles started from much higher FFR levels. Additionally, the Fed only cut the FFR by 25 bps three times during the 1995 easing cycle, the most recent soft landing.