The Weekly BriefContributor Global Markets Insights Strategy Team
At its most recent meeting, the Federal Reserve (Fed) continued its dovish pivot that it began at the start of the year, as it plays catch up with market expectations for interest rates.
On growth, the Fed acknowledged that, despite describing the economy as generally positive, economic growth has shifted from a “solid rate” to a “moderate pace”. It also acknowledged the persistence of low inflation, significantly downgrading its inflation forecast for 2019. The market continues to expect that the Fed will ease policy, anticipating three interest rate cuts by the end of the year. Given the committee’s assessment of weakening growth and soft inflation, we expect that the Fed will deliver a rate cut at its next meeting in July.
The market expects three Fed rate cuts by year-end
% Fed funds rate, FOMC and market expectations
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