A split Fed trim rates to cushion global headwinds, another cut this year likely.

As expected the Fed cut rates by 25 bps in the September meeting: there is still not enough consensus among FOMC members on the need for another cut. The macro forecasts have not changed significantly, showing that accommodation is meant to avoid tail risks to the economy.

Highlights:

  • As expected the Fed cut rates by 25 bps in the September meeting: there is still not enough consensus among FOMC members on the need for another cut.
  • The macro forecasts have not changed significantly, showing that accommodation is meant to avoid tail risks to the economy.
  • We expect a further 50 bps reduction by Q1 2020. The timing of the next cut (October or December) will be determined on the evolution of Brexit, which was cited as one of the key global risk for the US economy. Risks remain tilted towards a more aggressive move

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A SPLIT FED TRIM RATES TO CUSHION GLOBAL HEADWINDS, ANOTHER CUT THIS YEAR LIKELY.

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Market Compass May 2020
Edited by the Macro & Market Research Team. The team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.
The team translates macro and quant views into investment ideas that feed into the investment process.
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