Fed Could Still Pivot Away From a Rate Cut

Despite a policy pivot earlier this year and an even clearer shift just last week, the Federal Reserve remains miles apart from what Wall Street wants.

Central bank officials have indicated that a rate cut is at least on the table, but the market is demanding more — so much more, in fact, that a conflict between the current designated path of monetary policy and the amount of support that investors feel is necessary seems on a collision course.

“We’re heading for a reckoning,” said Danielle DiMartino Booth, CEO of Quill Intelligence and advisor to then-Dallas Fed President Richard Fisher. “This is where policy errors begin to happen, when the Fed cannot acknowledge they’re actually damaging the economy.”

Fed Chairman Jerome Powell, through his statements since the June 18-19 Federal Open Market Committee meeting, and his fellow central bankers via the “dot plot” of their rate expectations, at least has nodded that one rate cut could be coming if conditions continue to weaken.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza