Fed Cuts Only at Halfway Mark, Marathon's Richards Says

Group 1 - The Federal Reserve has reduced rates by 125 basis points since September of last year, currently at 4.25% to 4% [1] - The neutral rate is estimated to be around 3%, indicating that there is still room for further rate cuts [1][5] - The current restrictive rate environment is negatively impacting economic growth, particularly in sectors like housing and construction [2][3] Group 2 - Job growth is slowing, which is prompting the Fed to initiate an easing cycle despite higher inflation [3][5] - The next Fed chair, expected to take office in May, is likely to adopt a more dovish stance, potentially lowering rates to the neutral level of 3% [6] - Historically, the Fed has lowered rates by 100 basis points or more in 8 out of the last 14 instances, often leading to subsequent increases in long-term rates [6] Group 3 - The average mortgage rate in the U.S. is currently 6.4%, while existing mortgages average 4.1%, creating a significant gap that discourages homeowners from moving [8][9] - This disparity in mortgage rates is contributing to a slowdown in housing and construction activity, placing additional pressure on the Fed to adjust rates [9]