Federal Reserve Chairman Jerome Powell indicated in a press conference that an interest rate cut is likely in the near future. This move is designed to support the US economy in the wake of risks that have arisen, notably global economic growth slowdown and trade tensions. “Uncertainties about this outlook have increased, however, particularly regarding trade developments and global growth” Powell noted.
This marks a shift from the Fed’s previous policy of patience, with Powell citing concerns over economic outlook as the main reason for this change. He further acknowledged the growing pressure from various quarters such as businesses, investors and White House for a rate cut.
Powell also stressed the importance of the Fed’s independence from short-term political pressures and the need for it to stay focused on its mandate of promoting maximum employment and stable prices.
The market has already factored in multiple interest rate cuts in 2019, however, this is the first time the Fed has officially acknowledged the likelihood of a reduction. How significant the cut will be and when exactly it will be instituted remains unclear for now. However, many experts predict the cut could come as early as their next meeting in July.
In summary, the expected rate cut is seen by many as a preemptive measure to protect the U.S economy from potential threats and is likely to be implemented soon.
