Fed poised to get in first with rate cut despite market risks

The Federal Reserve looks poised to beat the European Central Bank out of the blocks with a rate cut that looks set for its next meeting on July 31.

Its chairman, Jerome Powell, will have the chance to push the message home tomorrow to a European audience when he speaks in Paris.

This comes after his comments last week in which he indicated a cut was on the way, pushed by the yield curve on US Treasuries to their steepest levels in over three years, an indication the market believed a cut was coming and that the Fed would be able stabilise economic output in the world’s largest economy.

There are, however, risks, given the aggressive markets, according to a report from the Washington-based Institute of International Finance, the most influential banking grouping in the world.

“However, substantial monetary policy support is well priced in: it has been a major factor pushing the market value of negative-yielding bonds above $13tn (€11.5tn) and in this year’s re-rating of global equities,” it warned.

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