Amid growing speculations concerning the US Federal Reserve’s rate cut announcements, Bloomberg interviewed former Fed Chairman Alan Greenspan who suggests an insurance interest-rate cut to the US central bank.
Key quotes
- Fed should be open to an insurance interest-rate cut to counter risks to the outlook
- It pays to act to see if you could fend it off.
- I remember very distinctly on a number of occasions we cut rates not because we thought that it highly probable that it would be necessary,” but because the fallout from an event happening, if it happened, would be very large.
- You will act to reduce the risk of those types of events and that’s a vital thing to do.
FX implications
While there was no immediate reaction to the news, the US Dollar (USD) will keep being under pressure if consensus increases for the Fed to announce a heavy rate cut during its next week’s meeting
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