by: Korman Tam
The Federal Reserve cut its benchmark lending rate by 50-basis points to 1% by unanimous vote and also lowered its discount rate by 50-basis points to 1.25%. The currency markets were heavily pricing in the aggressive move with the greenback tumbling against the euro and sterling heading into the decision. The dollar fell by over 700-pips versus the pound from 1.5765 to 1.6473 while dropping from 1.2583 to 1.2990 against the euro.
In the accompanying FOMC policy statement, the Fed delivered a somber assessment of the economy saying “the pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures”. The statement also paved the way for additional policy easing at the next meeting in December, revealing expectations for inflation to continue to moderate over the coming quarters. The Fed said “the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit”. Accordingly, we look for the FOMC to slash rates again in December with a 25-basis point cut bring the year-end benchmark lending rate to 0.75%.
Read more at forexnews.com
Scridb filter
0 Comments.