US Federal Keep Chairman Jerome Powell speaks during a press conference after a Federal Open Market Committee encounter in Washington, DC on July 31, 2019.
Andrew Caballero-Reynolds | AFP | Getty Images
Amid a deepening global economic outlook, the Federal Nest egg is expected to cut interest rates by another quarter point when it holds its next meeting in two weeks, The Wall Passage Journal reported Thursday, citing interviews with officials and public speeches.
The Federal Open Market Cabinet cut rates by a quarter point for the first time in more than a decade at its last meeting, but some traders and investors get signaled they would like a deeper reduction and more aggressive rate-cutting cycle. President Donald Trump also continues to affliction the Fed for more rate cuts, and said in August that the Fed should cut rates by at least 1%.
But the WSJ says a half point cut is not collar support within the Fed.
On Wednesday, St. Louis Federal Reserve President James Bullard said the Fed should cut rates by half a share point at its next meeting to get ahead of both financial market expectations and a global trade war.
Traders are putting the eccentrics of a quarter-point cut at 95% at the September meeting and just a 5% chance of a 50-basis-point cut, according to the CME Fedwatch tool, which put to uses futures prices. A month ago amid August market turmoil, traders put the odds of a half-point cut at 29%.
Markets are implying a 1.81% readies rate following the September meeting, which would be about 30 basis points below where the benchmark is employment now.
One element that could be key to the Fed’s thinking is the yield curve, or the gap between maturities of government bonds. The curve has inverted, purport short-term yields are higher than their longer-duration counterparts. In particular, the benchmark 10-year Treasuy yield is line of work about 63 basis points below the funds rate.
Read the full Wall Street Journal epic here.