Well, its official, the FED continues to be the coolest kid on the block for investors after Jerome Powell all but pre-announced a rate cut at the end of July, prompting the hard core dovish players to revamp their expectations for a -0.5% move, which I believe is a far-fetched option, and could prove to be too much at this time, spooking the market, instead of reassuring it.
But more than confirming the beginning of a new era, after a cycle of monetary policy normalization, Powell also supported the continuation of the rate downward trend in the near to medium term scenario, especially because even though the non-farm payrolls number were good, they weren’t enough to point towards an over-heating of the job market, because wages were lower than anticipated. Besides all this, the FED chair also reinforced the notion of a cooling world economy, which warrants for a preventive stimulus.
Photo by Iben Konig.
