The Fed’s “insurance” cuts look set to pay off

Dec 18, 2019 | Jay Zhang


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The Fed took a victory lap of sorts this week as most officials now believe that three rate cuts will prove sufficient to reduce economic uncertainty ahead, while a phase one trade deal finally appears to be actually at hand.

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The final Federal Reserve meeting of 2019 confirmed what many officials have already pledged publicly in recent weeks: the Fed is well and truly on hold having delivered three “insurance” rate cuts in recent months. Additionally, there is no longer a rift at the Fed between those who wish to ease policy, and those who did not, as a clear majority—13 of 17 officials— now see policy rates unchanged through 2020—a consensus that markets viewed favorably.

 

Market pulse

  •  It’s still a strong U.S. labor market
  •  Canadian economy not quite firing on all cylinders
  •  Election day in the UK
  •  Japan’s economy grows much more than first thought

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