Fx trading news: The Fed No. 2 person ＂spills cold water＂ on bets on interest rate cut traders. Is the market consensus wrong?
2020-02-21 10:46 from：CAPSTONE author：Jack
Capstone forex trading news: Fed Deputy Chairman Clarida poured cold water on traders betting on interest rate cuts on Thursday (February 20). Clarida said in an interview with CNBC that he believes that most market participants are not really looking forward to a rate cut. "Market pricing of interest rate cuts is a bit tricky because the market has expectations of interest rates and there may be term and liquidity premiums," Clarida said in an interview with CNBC's Steve Liesman.
According to various indicators, futures contracts show that the Fed will cut interest rates as early as June or July and no later than September.
However, Clarida said that a survey showed that most economists think the Fed will not relax monetary policy this year, and he thinks this view is very important.
He said, "I don't think people will take interest rate cuts into prices, although market prices may show that."
When Clarida spoke, stock futures fell.
Fed officials voted in the past two meetings to keep the benchmark interest rate unchanged. The current target is between 1.5% and 1.75%. Minutes of the Federal Open Market Committee's (FOMC) meeting released on Wednesday from January 28th to 29th show that members believe that the current economic situation has not changed significantly and that the policy is appropriate.
Record U.S. economic expansion continues, unemployment rate stays near 50-year low, inflation is under control, and manufacturing surveys—the latest being data released by the Philadelphia Fed on Thursday—indicate that the industry will shake off in 2019 Shrinks caused by tariffs. The stock market also continues to rise rapidly and is currently in a record bull market.
Clarida reiterated that "the fundamentals of the United States are strong", but he said that Fed officials are monitoring risks, especially coronaviruses.
He said: "This obviously could have a significant impact on China's growth in the first quarter."
However, there is no indication that it will affect policy.
"What we are looking for is evidence that we need to make a substantial reevaluation of our economic prospects. Of course, we have not done so," Clarida said, "but we are monitoring because China Is an important part of our economy. "
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