Economists Forecast More Fed Rate Cuts and Even Zero Rate

As trade tensions escalate and economic indicators weaken, Wall Street is beginning to anticipate more aggressive interest rate cuts for the Federal Reserve, with at least one forecast going so far as seeing a return to near-zero.

Economists now see the likelihood of three quarter-point reductions before the end of the year, along with multiple moves in 2020 until it becomes clear that the U.S. central bank has staved off a recession. The anticipation comes as Goldman Sachs just announced that it reduced its GDP projections by 0.2 percentage points and Bank of America Merill Lynch said it sees increasing chances of a recession in the next 12 months.



Other forecasters on the Street are joining the calls for weakening conditions that prompt the Fed to take a sharper knife to rates than officials indicated at the July meeting, which saw the first rate reduction in 11 years.

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