Market Call: Back To Higher For Longer?

Remember the "higher for longer" mantra about the outlook for the federal funds rate (FFR) during the spring? It turned into "lower and sooner" this summer in response to the economy's soft patch. After Friday's strong employment report, the consensus might pivot to "no rush to ease further" during the fall. We can't rule out "higher for longer" making a comeback this winter. We are in the none-and-done camp for the rest of this year.

In the past, once the Fed started cutting the FFR, it was followed by a quick succession of additional rate cuts (chart). So far, the difference this time is that there's no credit crisis, credit crunch, or recession. Instead, the economy continues to grow at a solid pace around 3.0% on a y/y basis. So there's no rush for the Fed to ease, especially if the economy continues performing well.