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  • The Fed’s set for a 25bp cut, but it’s a close call

    From think.ing.com

    It has been an eventful summer with the combination of a Bank of Japan rate hike on 30 July, which caught many in the market off guard, and the Fed pivoting to put less emphasis on inflation and more on the jobs situation at the 31 July FOMC meeting, triggering some major market moves. This was compounded by a weak US labour report on 2 August. With the yen surging, creating concerns about potential financial market dislocations, the market moved to price for a potential inter-meeting Fed rate cut. At one point 60bp of easing was priced by the September FOMC meeting and a cumulative 138bp priced by year-end. Soothing ... (full story)

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There is also a view that the interest rate cut is taken as a sign of the economic downturn and the dollar weakens as a result.

However, this time, it is expected that it will strengthen the US economy and maintain the strength of the dollar because it is a rate cut in the situation of artificial intelligence innovation.
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