The financial markets, as well as President Donald Trump expecting the Federal Reserve to cut the rate at today’s meeting or signal future rate cuts later in the year.
But can the Federal Reserve really match the expectation?
It is unlikely that the Fed would be able to meet the expectations of the President, who would like the central bank to deliver significantly at today’s meeting, either by rate cuts or fresh stimulus. But it might match the market expectations.
The market is currently pricing the possibility of a rate cut before the end of the year with 97.7 percent probability and the possibility of two rate cuts with 81.7 percent probability. The third rate cut is priced with a 55.9 percent probability.
We expect the Federal Reserve to forecast at least one rate cut as forecasting two rate cuts by taking no actions today would be a tougher stance to do. We expect the Fed to cut rates by 25 bps today if it plans to deliver two this year.
The Federal Reserve would be announcing its decision at 18:00 GMT.


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