Fed: The question is by how much –  NFB


Next week, the key event in the US will be the Federal Reserve meeting. According to National Bank of Canada analysts, the FOMC will cut rates and the question is by how much. 

Key Quotes:

“In the U.S., the Federal Reserve will cut benchmark rates this week, the question is by how much. St. Louis Fed President James Bullard has recently argued in favor of a 50-basis point cut and there is indeed an argument to be made in favour of such a policy path. Trade uncertainties are still very much an issue and, judging from the latest ISM report, factory conditions are now deteriorating.”

“The key going forward will be to see whether the slowdown in manufacturing spreads to other sectors of the economy. As of now, the labour market remains sufficiently strong to accommodate new entrants to the labour force and support healthy consumer spending. Inflation, meanwhile, is trending up towards target. On the financial front, new issuance of corporate bonds has been on fire lately and stock indices stand near all-time highs.”

“In our opinion, it would be difficult for the Fed to justify a 50-basis point move in such an environment, especially given that trade talks between the U.S. and China are set to resume in October. We are therefore calling for a 25-bps cut on Wednesday to be followed by another similarly-sized move before the end of the year.”
 

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

EUR/USD hovers around the 34-months lows amid growth concerns

EUR/USD is trading below 1.0850, just above the lowest since April 2017. Concerns about eurozone growth are weighing on the common currency. Markets are watching coronavirus developments. 

EUR/USD News

GBP/USD shrugs off Brexit concerns and holds its ground

GBP/USD is trading around 1.3050, little-changed. The French foreign minister warned of acrimonious Brexit talks as the UK's chief negotiator is laying down a tough stance. 

GBP/USD News

Forex Today: Coronavirus fears persist, Japanese economy squeezes, cryptos climb down

China has announced it will stimulate the economy in the face of the coronavirus outbreak, including lower corporate taxes and increased spending. While most factories have returned to work, Beijing has tightened restrictions on movements in the Hubei province.

Read more

Gold slips below $1580 level amid improving risk sentiment

Gold retreats from two-week tops amid receding demand for traditional safe-haven assets. The precious metal failed to capitalize on its recent positive move to near two-week tops and edged lower during the early European session on Monday amid fading safe-haven demand.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures