Statement

We expect the Fed to cut the Fed Funds rate once more

Munsbach, 28. Oktober 2019 – In addition to maintaining stable prices, the objective of the U.S. Federal Reserve is to promote full employment. However, it is currently facing an employment slowdown in the non-farm payroll sector and declining retail sales. External risk factors, such as Brexit and the U.S. - China trade dispute, appear to be on the verge of a solution, albeit not immediately.

In both July and September of this year, the Fed had decided to lower the Fed Funds rate by 25 basis points to mitigate possible negative consequences for the economy, in particular from the aforementioned trade dispute. The current range for the Fed Funds rate is from 1.75% to 2%. For the coming FOMC (Federal Open Market Committee) meeting on Tuesday and Wednesday we expect the third consecutive rate cut of 25 basis points this year, resulting in a reduced range of 1.50% to 1.75 %.