A snippet from a note via Standard Chartered with an Federal Open Market Committee outlook for July 31 and beyond.
StanChart forecast for rates:
- expect FOMC to lower the federal funds target rate by 25bps in July
- see a growing prospect of a second 25bps rate cut in September
(Stan Chart current second cut is forecast in December, say a Sep cut would be instead of)
For the Statement and presser:
- We expect the description of the US economic situation in July's statement to be broadly similar to that in the June statement
- The statement and the press conference are likely to note heightened uncertainty over the growth outlook and describe the 25bps cut as a pre-emptive move.
- It is also possible - though not likely, in our view - that either or both will go a step further, raising the possibility of a series of consecutive cuts.
- If the commentary emphasises growth concerns (in the context of muted inflation), this would indicate to us that the Committee will favour a further 'insurance' cut and then will wait to see whether the economy (and inflation) responds - unless stronger evidence emerges of a significant slowdown in global growth and a consequent impact on the US economy.
