Fed: Willingness to cut interest rates – Danske Bank

Danske Bank analysts point out that at the ‘Fed Listens’ conference, Fed Chair Powell showed a willingness to cut interest rates.

Key Quotes

“He initiated his opening speech with an odd one out paragraph on the current policy situation, on which he stated the Fed “will act as appropriate to sustain the expansion” amid “trade negotiations and other matters”. In our view, this supports our call for a rate cut signal at the June FOMC meeting and a subsequent rate cut at the July or September meeting.”

“The big question now is whether the ECB will also make a new dovish turn tomorrow. In that respect, remember the ECB is already on an ‘easing bias’ but inflation markets are clearly doubting the ECB’s ability to react. This was illustrated yesterday following Euro area inflation that came in on the low side with 5y5y Euro area inflation expectations dropping close to a historical low.”