The upcoming interest rate cut in the United States is currently dominating the Forex market. With several conflicting economic reports and all of the possible negative outcomes from Donald Trump’s aggressive trade politics, it became clear that the American economy needs help from the Federal Reserve in order to prevent further damage. Based on Jerome Powell’s recent statements, investors revised their expectations for a rate cut from 50 points down to just 25, which is more in line with the Fed Chief’s careful approach to monetary policy.
However, the President of the New York Federal Reserve, John Williams, now threw market analysts a new bone by stating that if the Fed is to adjust the monetary policy, it will be safer to cut the rate more at once, as this is easier to correct in the future. This is giving grounds for investors to believe that the rate cut will be 50 points, after all.
There will be other speeches by prominent members of the Federal Reserve, such as Eric Rosengren and James Bullard. If they seem to echo Williams’s sentiment, then it might mean the Fed will cut the rate deeper than previously expected.
This will be the first interest rate decrease in the United States since the global financial crisis. It is expected to come at the July 30-31 policy meeting of the Federal Reserve.
