Fed poised to get in first with rate cut despite market risks

Fed poised to get in first with rate cut despite market risks

The Federal Reserve looks poised to beat the European Central Bank out of the blocks with a rate cut that looks set for its next meeting on July 31.

Its chairman, Jerome Powell, will have the chance to push the message home tomorrow to a European audience when he speaks in Paris.

This comes after his comments last week in which he indicated a cut was on the way, pushed by the yield curve on US Treasuries to their steepest levels in over three years, an indication the market believed a cut was coming and that the Fed would be able stabilise economic output in the world’s largest economy.

There are, however, risks, given the aggressive markets, according to a report from the Washington-based Institute of International Finance, the most influential banking grouping in the world.

“However, substantial monetary policy support is well priced in: it has been a major factor pushing the market value of negative-yielding bonds above $13tn (€11.5tn) and in this year’s re-rating of global equities,” it warned.

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