Analysts at ABN AMRO expect a further cut in December by the Federal Reserve, while noting that the Fed would switch entirely to a neutral stance as seen earlier in the year.
Key quotes
“The September FOMC minutes showed “several participants suggested that the Committee’s postmeeting statement should provide more clarity about when the recalibration of the level of the policy rate in response to trade uncertainty would likely come to an end,” given the disconnect between how much easing is priced in by markets vis-Ã -vis the Committee’s own projections.”
“The dataflow has continued to weaken in the US, and while some kind of truce in the US-China trade war is possible next month, it is far from certain.”
“As such, we think the Committee will be reluctant push back rate cut expectations too much, especially given that after tomorrow, there will be only a bit over one more cut priced in by markets over the next 12 months.”
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