Fed Rate Cut Approaching in July
|U.S. Review
Fed Rate Cut Approaching in July
- Fed Chair Powell did nothing during his Semiannual Monetary Policy testimony to Congress this week to push back against the market’s view that the Fed will cut rates at its July 30-31 meeting.
- We expect that ongoing “crosscurrents” facing the U.S. economy will compel the Fed to cut rates both in July and again later this year, likely in October. The core CPI rose 0.3% in June, the largest monthly increase since January 2018, yet the generalized weakness in inflation this expansion further supports the Fed’s rate cut case.
Global Review
Temporary Reprieve on the Global Front
- There were some mildly encouraging elements in this week’s international economic figures, although we believe this represents a temporary reprieve rather than the start of a sustained improvement.
- U.K. GDP rose 0.3% month-over-month in May, reversing most of its April decline. However the gain was led by the manufacturing sector, with activity in the important services sector flat on the month.
- Eurozone industrial production rose in May, but soft orders data and PMI surveys suggest further declines can be expected.
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