Markets absorb the Fed, BoE cuts, but questions emerge [Video]
|The Federal Reserve (Fed) delivered the second rate cut of the year yesterday. Chair Jerome Powell said that the Fed doesn’t rule ‘out or in’ a rate cut in December, that the US economy is expanding solidly, that conditions in the labour market eased but the unemployment rate remains low, that inflation ‘made progress’ but not a ‘further progress’ – just progress – toward the committee’s 2% objective but remains elevated’, that the Trump policies won’t have an immediate impact on the US fundamentals as they don’t know how much time it will take the new Trump administration to implement them, and that he wouldn’t step down if Trump asked him to do so.
But the Fed has no choice but to dance to Trump’s tune, whether it likes it or not. That reality comes with the risk of higher-than-otherwise inflation and deserves careful attention.
For now, the probability of another 25bp cut in December is given 71% in the immediate aftermath of the US election and the Fed cut. US yields and the dollar took a breather after the recent rally, and US equities renewed record.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.