The Fed Clears the Way for Cuts as the Market Seeks Even More

Fixed Income

June 2019

Ellen Gaske, PhD, CFA, Principal and Lead Economist, G10 Economies, Global Macroeconomic Research Team and Robert Tipp, CFA, Managing Director, Chief Investment Strategist and Head of Global Bonds

The dovish tilt to the Feds June meeting created more optionality for itself, clearing the way for possible rate cuts in the second half of 2019 if incoming data indicate that economic growth is at risk of downshifting and prospects for a pickup of inflation towards 2% are fading. Our base case now expects two rate cuts in the second half of 2019—more than what the median Fed projection has penciled in, but less than the three cuts the market has been pricing in.




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