Experts Expect Rate Cuts By The Federal Reserve on Wednesday
This Wednesday, economists and market experts are expecting the Federal Reserve to announce further rate cuts. Should this happen on Wednesday, it will be the third time this year that the Fed is cutting down rates. Anxiety, however, lingers on what the Fed will say concerning future policy. Expectations are high that any announcement touching on that topic will trigger market volatility. This sentiment persists because expert opinion on the topic is largely divergent.
Jerome, a Man in Hot Soup
Although his job is not at risk, Wednesday may be the toughest day of Fed Chair Jerome Powell’s career yet. His way of communicating the Federal Reserve’s opinion on future policy is what everyone is waiting to see. With the way the markets are set up currently, any slight suggestion of anything about the future policy will trigger a reaction. Therefore, it is up to him to make a compelling press statement on Wednesday.
This Wednesday, the Federal Open Market Committee is meeting, and people expect a further cut-rate. Should that happen, it will be the third rate cut made by the committee since July of this year. After that, the Fed will release a press statement. Experts expect that the Fed will tweak this statement to indicate that the door remains open for further rate cuts in the future. However, some skeptics think that the Fed could suggest that it will pause in the process of implementing the rate cuts.
A Hawkish Statement
Jerome Powell addressed the press half an hour after the Fed press release at 2:30 p.m. ET. Market experts expect the Fed Chair to explain the Fed’s position. What observers are predicting is that the chair will state categorically that the Fed is pausing on rate cuts. This act of holding off is a result of the need to first analyze the impact of the interest rate cuts on the performance of the economy.
Experts also expect that the Fed will announce to the press that it is monitoring external factors that might affect the economy. At the top of these are political uncertainties is within in the Eurozone with a looming Brexit deal. Additionally, the trade war with China is also something that the Fed is closely watching.
Pessimism continues to exist; however, market observers are also keeping tabs on the president. Previously, President Trump criticized the Federal Reserve for what he called ‘lacking guts’ to implement further easing policies.
Dilemma and a Divided Market
The Fed’s announcement on Wednesday will add weight to the already existing debate between market experts. While some believe that after Wednesday, the Fed will not implement any other rate cuts, some differ. They argue that the economy is heading into a recession, and therefore further rate cuts are necessary.
The one opinion that seems to be nearing the truth, however, is the possibility of the Federal Reserve to pause on further rate cuts. Those who opine this way expect that the Fed will do this, but will still keep the door open should further rate cuts be necessary for the future.
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