The US Federal Reserve (Fed) is widely expected to cut interest rates by a quarter-point to 2.00-2.25% on July 31.
That would be an insurance cut – a proactive move to protect against growing downside risks, according to analysts at Goldman Sachs.
Notably, while market-implied odds are consistent with a turn in the cycle, Goldman Sachs analysts do not foresee Fed starting a full-blown easing cycle in the near-term.
Key quotes
“Our reasoning for policy easing – slowing growth against a backdrop of subdued inflation and elevated uncertainty – is consistent with the Fed’s reasoning for insurance cuts.”
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