Rising odds for rate cuts in July – UOB
|Researchers at UOB Group assessed the recent dovish testimonies from Fed’s Jerome Powell.
Key Quotes
“FOMC Chair Powell’s Congressional testimony on 10 Jul (Wed) was seen as very dovish, setting the stage for the Fed to cut rates as early as end of this month (Jul FOMC)”.
“Powell highlighted that trade uncertainties and concerns about global economy continue to weigh on the US and repeated that the Fed will act “as appropriate” to sustain US economic growth. He was willing to look past the strong US current data (like the Jun employment) and place more emphasis on the risk of an uncertain outlook. Powell’s most important concerns are cross currents of trade policy and slowing global growth while persistent low inflation is another factor”.
“Following the very dovish Powell testimony, we have revised our Fed call and we now expect a Fed rate cut at the July FOMC (instead of Sep FOMC). This is seen as a pre-emptive “insurance” rate cut in view of the uncertain outlook despite robust current economic data. We do not think the Fed will deploy a “bazooka” 50bps rate cut since this is supposed to be the Fed taking out an insurance policy against an unknown future”.
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.