Fed divided over rate cuts, GBP unimpressed by Johnson/Merkel meeting…
Last night’s Fed meeting minutes revealed a central bank heavily divided over the most recent rate cut as well as the future path for monetary policy. Detail showed that consensus for lowering rates last month was based around inflation being too low. While some voting members sought a 0.50% cut instead of the 0.25% we actually got, some even voted for no cut at all highlighting that the economy is in a good place. The future path for rates has just become even more uncertain. A cut at September’s meeting is now harder to envisage unless the quality of economic data is significantly reduced. The greenback saw mild gains after last night’s release with the cable rate (GBPUSD) pushed back down to the low $1.21s. With future rate cuts compromised the greenback may see renewed bids.
Yesterday, Boris Johnson met Angela Merkel and while the post-meeting press conference was cordial, very little encouraging detail could be spotted. The main element to arise from the gathering was a challenge by Merkel to Johnson to find a solution to the Irish backstop within the next 30 days. This puts a pin on the 21st September which happens to be the 1st day of the Labour Party national conference. GBP remained unimpressed by the meeting and continues to be pressured by the lack of progress in regard to Brexit.
Today is much more active on the data front, Eurozone flash PMIs will be released as well as US ones too. Additionally, we’ll be treated to meeting minutes from the European Central Bank’s last gathering earlier this month.
Written by Viv Savani. 8:47am, August 22nd 2019
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