The verdict is out and while there was no rate cut today, Jerome Powell and his entourage gave the market pretty much all what it wanted, by simply dropping a promise to be “patient” in adjusting rates, meaning rates will come down by at least 0.5% during 2019, which is a bit less than the 0.75% expected by investors.
But the important nuance was the dovish indication that the FED is prepared to reverse the previous upward cycle, just when the central bank board members inflation expectations for the year, got lower from 1.8% to 1.5%. Wall Street benefited with a small boost on the back of news, just like the Euro, but not significantly, tomorrow will probably be the real test.
Photo by Chris Li.
