Analysis: If Rick Rieder Becomes the New Fed Chair, Three Rate Cuts May Occur This Year

Odaily News On January 28, as a Wall Street veteran, Rick Rieder is seen as someone who would bring a market-centric approach to the Federal Reserve. In September last year, he advocated for a more aggressive 50 basis point rate cut, rather than the 25 basis point gradual steps the Fed was leaning towards at the time. Simultaneously, he also opposed the central bank's forward guidance on future interest rate trends, namely the so-called "dot plot."

Economists at Evercore ISI, including Krishna Guha, wrote earlier this week, "He would adopt a dovish stance on interest rates and might advocate for three rate cuts this year."

Currently, the interest rate swap market is pricing in less than two 25 basis point cuts by 2026. However, in the SOFR options market, a significant number of positions have recently emerged that would benefit from multiple rate cuts, aiming to bring the federal funds rate down to as low as 1.5% by the end of this year, well below the current swap market pricing of around 3.2%. (Jin10)