Investors warn of ‘disconnect’ as markets price in early Fed rate cut

Some investors are warning of a mismatch between market expectations and the Federal Reserve’s stated commitment to stamping out inflation as traders stand by their wagers on interest rate cuts next year.

Traders in the futures market are betting the central bank’s main interest rate will be cut to 3.3 per cent by the end of next year after peaking at 3.7 per cent in March 2023. That implies the Fed will have to cut rates by the…