Fed: Fairly small chance of a rate cut today – Deutsche Bank

Deutsche Bank analysts point out that the market is pricing in a fairly small chance of a rate cut today and 20% to be precise.

Key Quotes

“Our US economists expect the statement to drop its “patient” narrative and adopt language similar to Powell’s recent statement that the Committee will “act as appropriate to sustain the expansion.” This shift should signal that downside risks are building and that the Committee stands ready to lower rates in the coming months if the macro and markets environment justify it.”

“The dots should show some movement in this direction, with the median dot likely to be flat in the coming years and some individual dots calling for cuts this year, but the SEP should stop short of having the median dot imply cuts. Powell’s press conference is likely more important than the dots and this is his chance to reinforce the dovish tilt.”