The Fed Clears the Way for Cuts as the Market Seeks Even More

PGIM
Door juli 5, 2019 13:02

The Fed Clears the Way for Cuts as the Market Seeks Even More

Although the Fed remained on hold at its June 2019 meeting, its statement was about as dovish as could be expected given that FOMC participants appear fairly evenly divided on the need for rate cuts going forward. The split in policy views is likely a reflection of cross currents in the economic backdrop that the Fed cited: an upbeat assessment of the labor market (strong), economic activity (rising at a moderate rate), and consumer spending (picking up). But weakness in business fixed investment, sub-2% inflation, weaker growth abroad, and trade war uncertainties were enough for many FOMC participants to pencil in rate cuts for this year and to tip their median projection to an expectation for a full rate cut by next year. Arguably, the most dovish outcome of the Fed’s meeting was a drop in Fed officials’ median estimate of the long-run neutral Fed Funds rate to 2.5% from 2.8% as of last March. 

PGIM
Door juli 5, 2019 13:02

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