Fed: We still see two more cuts down the road – Nordea Markets

The Federal Reserve as expected cut rates today. Nordea analysts point out the meeting turn out to be more hawkish than markets expectations. They still see more rate cuts. 

Key Quotes: 

“The Fed made very few changes to their forecast for the US economy, and still sees growth to continue forward at a close to a 2 % pace. However, while their view of the economy going forward is unchanged, the interest rate is lower.”

“We’ll make decisions meeting by meeting”. That was Powell’s main message from the press conference. Both incoming data and the evolving risk picture will determine the need for any further adjustments to rates.”

“While the Fed still has a favourable view of the US economy, and don’t see a big need for further cuts, they will not hesitate to react if the outlook worsens. As Powell highlighted: “If the economy weakens more (than the Fed now expects), more cuts will follow”.

“We didn’t learn much from todays press release or press conference. The evolvement of the US economy and risk picture will determine how many more cuts will potentially follow. We still think the economy will slow more than what the Fed forecast (but don’t pencil in a recession). Therefore, we still see two more cuts down the road.”