U.S. Fed cuts interest rate by 25 basis points to 2 pct

The U.S. Fed cut interest rate by 25 basis points to 2 percent today, as was widely anticipated. The description of the economy was little changed, noted DNB Markets in a research report. The U.S. economic activity is still said to be growing moderately and job gains are seen as strong. Households spending is increasing at a robust rate, while investments and exports have softened.

The new dot-chart median indicates no further rate cuts in 2019 and nor in 2020. The median then indicates towards one hike in 2021 and in 2022.

The U.S. Fed has not made any changes to the GDP forecasts for 2020, nor has it made any changes to the projections of core inflation and unemployment for 2020. The GDP is expected to grow 1.9 percent in 2021 and to decelerate to 1.8 percent in 2022.

“The overall impression in that Fed will continue the easing process only if the economy were to deteriorate further. We still think a couple of more cuts are likely going forward. The dot chart shows that 7 of 17 members foresee one more cut this year”, added DNB Markets.