The Fed thinks overnight interest rates will climb to about 5.1% by the end of the year. Wall Street isn’t exactly calling Jay Powell’s bluff, but as far as big money is concerned, the next rate hike will be the last.

And even that projected rate hike reflects confidence that the economy and the banking system can handle slightly higher interest rates without crashing. A month ago, people thought Silicon Valley Bank was the beginning of the end of the world, a 2008-style “Lehman Brothers event.”

Here we are and the world has not ended. The big banks are thriving. Most little banks are thriving too. It’s hard not to make money when the Fed is increasing what you can charge borrowers on a month-to-month basis.

Now that more investors realize this, bets on the Fed pausing next week have practically vanished from the futures market. People have given up on that perverse hope that the economic environment has gotten so toxic that inflation will magically disappear and give us all interest rate relief.

Instead, the view is now more nuanced. Most investors agree that we’ll get one more rate hike. They’re backing that belief up with real money. After that, some think the Fed will need to make one more move in June. Others think we’ll start seeing small rate cuts to stimulate the economy and support the banks.

Personally, I think the majority view is correct. The Fed is on the brink of declaring victory on inflation. All the major price indices are flattening out as the economy runs out of the steam created by burning free money.

After September, cuts become more and more likely. At that point, we’ll have enough data to see where and how the economy is contracting. That’s when Jay Powell has historically revealed his dovish side.

If we get through the summer, money gets cheap again. Probably not “free” because zero-rate policy never lasts forever. But cheap on a relative basis, maybe even cheap in historical terms.

A year from now, overnight rates could be back at 4%. Guess what? That’s exactly where the Fed thinks they’ll be. Cuts this year are questionable, but when the people who vote on interest rates say they’ll be cutting in 2024, believe them.

And then in 2025, they’ll cut more. By that point, we’re looking at 3% . . . and that’s far from apocalyptic. The fed funds rate was on its way back up to 3% before COVID hit. Back in the dot-com boom, it never got below 4.6%. We can live with that.

We just have to get there first. Stay liquid. Stay nimble. But stay invested!