Deutsche Bank analysts point out that not long ago today’s FOMC was perhaps gearing up to be closer to a 50/50 call between a 25bp or 50bp cut, however, the latter looks a lot less likely now with markets only pricing in about a 15% chance of that happening.
Key Quotes
“Our US economists also expect a 25bp cut which mirrors the consensus.”
“The bigger focus will be on what the Fed signals about the expected policy trajectory in the coming months. Our US economists note that a continued dovish bias should be evident in the statement language, Summary of Economic Projections and Chair Powell’s press conference. The latter in particular should echo the narrative that, while the baseline outlook for the economy remains favorable, officials are attuned to significant risks emanating from softer global growth and elevated trade uncertainty. As in July, Powell should stop short of detailing the likelihood and timing of any future actions, but the signal should be that the bar is set relatively low for further rate reductions with the Committee intent to “act as appropriate to sustain the expansion”.”
“Our colleagues do not expect the September rate cut to be the last of this cycle though. With accumulating evidence that the economy is slowing amid greater sensitivity to the trade turmoil, they recently adjusted their call to reflect a further cumulative 75bps of rate cuts after this meeting, specifically at the October, December and January get togethers.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fluctuates in daily range above 1.0600
EUR/USD struggles to gather directional momentum and continues to fluctuate above 1.0600 on Tuesday. The modest improvement seen in risk mood limits the US Dollar's gains as investors await Fed Chairman Jerome Powell's speech.
GBP/USD stabilizes near 1.2450 ahead of Powell speech
GBP/USD holds steady at around 1.2450 after recovering from the multi-month low it touched near 1.2400 in the European morning. The USD struggles to gather strength after disappointing housing data. Market focus shifts to Fed Chairman Powell's appearance.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world.