Just three months ago, investors were in a panic over the idea that the Federal Reserve might push borrowing costs too high and tip the U.S. economy into a recession, The New York Times reported. Now, Wall Street is toying with the idea that the central bank could actually be cutting interest rates by the end of the year. Those forecasts are evident in the market for interest rate futures, where the odds of another interest rate increase in 2019 have fallen to zero, from about 30 percent in December, while the chance of a decrease in rates has risen to more than one in five. One reason for the changing forecasts? The Fed’s own signal to be more patient as it evaluates whether or not to keep raising interest rates. Since the central bank’s chairman, Jerome H. Powell, first spoke about this newfound patience, stocks have soared more than 15 percent. The Fed could add more fuel to this rally on Wednesday, when the central bank concludes its latest monetary policy meeting. It is expected leave interest rates untouched and further emphasize that it is in no hurry to lift them. The central bank isn’t the only reason that the market is up. Some analysts point toward rising hopes for a U.S.-China trade deal as helping to lift important technology and industrial shares. However, sectors sensitive to interest rates — small companies for which borrowing costs make up a significant cost, and homebuilders and carmakers whose customers depend on financing — have posted some of the bigger gains in this rally. Those increases have come even as forecasts for economic growth have shown concern about a slowdown. Economists expect that the U.S. grew at an annualized pace of less than 2 percent in the first quarter, a slowdown from the 3 percent growth posted in 2018.
