Fed is ready and willing to cut if necessary – Standard Chartered


Sonia Meskin, US economist at Standard Chartered, points out that in the June FOMC meeting, the Committee clearly left the door open for a rate cut, without indicating a definitive commitment to easing and was consistently communicated in the Summary of Economic Projections (SEP), the statement and the press conference.

Key Quotes

“We continue to expect a 25bps FFTR cut in July; we believe it would take a definitively positive G20 outcome and an improvement in the data for the FOMC not to cut next month. A 50bps cut is also on the table in case of a poor G20 outcome or a pronounced economic deterioration.”

“Policy easing would be largely pre-emptive: the SEP and the post-meeting statement emphasised little change to the baseline outlook for growth and inflation but noted increasing downside risks, primarily from slowing global growth and trade tensions.”

“Also in line with our expectations, Chair Powell mentioned in the press conference that a key goal of the ongoing policy framework review is to strengthen the FOMC’s commitment to the 2% medium-term inflation objective through communication strategies. We expect this to come in the form of forward guidance, as we described in Fed framework review won’t bring pre-emptive cuts. However, further downside risks to growth would be a concern, as they could entrench low inflation expectations. Separately, contrary to our expectation, the FOMC did not signal an end to the balance-sheet taper before September 2019.”

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.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD surges toward 1.3150 amid upbeat UK data, USD weakness

GBP/USD has been extending its gains after the British CBI Trends figure beat expectations. Markets are pricing a BOE rate cut less aggressively. The US dollar is on the back foot across the board amid reduced coronavirus fears.

GBP/USD News

EUR/USD struggles to recover amid Trump's tariff threats

EUR/USD is trading below 1.11, close to the three-week lows, as President Trump continues threatening the EU with car tariffs. Markets remain concerned about the spreading coronavirus disease. 

EUR/USD News

BoC goes dovish, USD/CAD jumps above 1.31

In a widely expected decision, the Bank of Canada on Wednesday announced that it left its policy rate unchanged at 1.75% at its January policy meeting. In its policy statement, the BoC noted that it sees less risk of an extreme downside scenario related to trade tensions.

Read more

Gold Price Analysis: Intraday uptick falters near 50-hour SMA, remains vulnerable

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European session on Wednesday.

Gold News

USD/JPY rises above 110.00, potential head-and-shoulders on 1H

Risk reset in stocks is boding well for USD/JPY.  The pair may be forming a head-and-shoulders pattern on the hourly chart. The bulls are not out of the woods yet and a break above 110.12 is needed to invalidate lower highs setup on the hourly chart.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures