Jay Powell reduced US interest rates by 25 basis points once again last night, moving the corridor range down to 1.50% – 1.75%. As mentioned in the title, this is the 3rd rate cut in successive meetings. Jay Powell did, however, indicate that this latest cut was another insurance move, based around a weakening global outlook. He cited both China/US trade tensions and Brexit (again).
Last night’s announcement did offer something for the hawks and US dollar bulls. The Fed confirmed they would now be on pause-mode while they access the economy and the impact of their 0.75% collective rate reduction. This “pause-mode” was evident via the removal from the statement of the line that the Fed “Will act as appropriate to sustain the expansion.” The greenback initially caught a bid but this reversed as Powell’s press conference performance was more than dovish.
Today’s economic calendar sees Eurozone and Canadian GDP figures as well as US PCE inflation and Eurozone inflation data. Many will also be keeping a close eye on UK politics as we’re ever so close to entering campaign-mode with the expected general election just around the corner in December.
Written by Viv Savani. 8:11am, October 31st 2019
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