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Interest Rate Outlook: Fed Evaluating Risks to U.S. Economy
As U.S. Federal Reserve officials enter the communications blackout period ahead of the June 18–19 FOMC (Federal Open Market Committee) meeting, bond markets are pricing in a modest chance (roughly 12%) that the Fed will cut interest rates by 25 basis points in June, and a much higher (roughly 88%) chance of a cut by the subsequent meeting in late July (source: Bloomberg as of 10 June 2019). We don’t expect a rate cut in June, but if downside risks to the economy escalate, a 50 basis point cut in July is possible, in our view. Much has changed since just last month, when markets were generally pricing the Fed to be on ... (full story)