Fed: A rate cut in July and growing prospect of a second cut in September - Standard Chartered
|
Next week, the FOMC will meet. Sonia Meskin, an economist at Standard Chartered Bank (NY Branch), affirms they expect a 25bps cut in July and see an increasing risk of another 25bps cut in September.
Key Quotes:
“We expect the FOMC to lower the federal funds target rate (FFTR) by 25bps in July. We also see a growing prospect of a second 25bps rate cut in September (instead of December, our current forecast). We expect the description of the US economic situation in July’s statement to be broadly similar to that in the June statement.”
“The statement and the press conference are likely to note heightened uncertainty over the growth outlook and describe the 25bps cut as a pre-emptive move. It is also possible – though not likely, in our view – that either or both will go a step further, raising the possibility of a series of consecutive cuts.”
“If the commentary emphasises growth concerns (in the context of muted inflation), this would indicate to us that the Committee will favour a further ‘insurance’ cut and then will wait to see whether the economy (and inflation) responds - unless stronger evidence emerges of a significant slowdown in global growth and a consequent impact on the US economy.”
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.