Ellen Gaske, PhD, CFA, Lead Economist for G10 Economies, Global Macroeconomic Research Team, and Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds
The Federal Reserve again nudged the Fed funds rate target down another 25 bps to 1.75%-2.0% in its latest policy meeting. In a sign of just how divided the Fed is over the appropriate policy stance, however, three FOMC members dissented from the decision. The U.S. and global backdrops create an environment of “difficult judgments, disparate perspectives,” as Chairman Powell noted.
If our outlook for U.S. economic growth and inflation pan out, resistance by some Fed officials to further rate cuts going forward may increase. We think the risks are heavily skewed towards an additional rate cut later this year or early next year, however.