When will the Fed lower interest rates?
The interest rate decision of the US central bank is scheduled for tomorrow. The expectation is that the Fed will leave interest rates unchanged tomorrow. Economists say chances are that Jerome Powell will announce an interest rate cut during the next interest rate decision in July. And that would be striking, because few analysts had anticipated this three months ago.
During the past weeks, some disappointing macro figures have appeared about the American economy. Yet there was a bright spot last Friday. The figures on retail sales actually looked pretty good. The figures from the previous two months were also adjusted upwards. Partly because of that, the dollar had an excellent trading day on Friday.
Economists are counting on an interest rate cut this year
Nevertheless, there is a good chance that the Fed will shortly implement an interest rate cut. The trade war between the US and China is slowly but surely starting to have an effect on the growth of the US gross domestic product.
The most recent Bloomberg survey shows that 58% of economists surveyed are counting on a US interest rate cut this year. Three months ago that was only 9%. At the time, the vast majority of economists were actually counting on an interest rate rise (72%). Three months later, only 5% of economists expect an interest rate rise this year.
Jerome Powell is expected to announce what the plan is for the US central bank tomorrow during the commentary on the interest rate decision. And that can be an important moment for the direction of the stock markets.