Today the main focus of the financial markets is on the Federal Reserve, who are expected to announce an interest rate decrease. Right now investors are confident the slash will be by just 25 basis points (down from 50, as some speculated earlier). More importantly, analysts will be looking for clues as to whether this will be the only rate change in 2019 or if the Federal Reserve is preparing a series of cuts.
Recent fundamentals coming from the United States have been positive. However, inflation is below 2% despite all of that. Moreover, the extended trade dispute with China, which doesn’t seem to be ending anytime soon, is adding a lot of pressure. The Federal Reserve might implement some stimulus packages like the ECB does in Europe, in addition to the rate cut.
President Trump has repeatedly asked the Federal Reserve to slash rates. This week he tweeted that he expects a big cut (probably meaning the 50 basis points rather than 25). Nevertheless, the Federal Reserve is actually independent from the President and it is up to the economists governing it to decide what changes are appropriate.
