Right now, tension can be felt in the market as participants continue to wait for the Federal Reserve’s upcoming rate cut which was announced to occur this month. But they are not the only ones who are on edge. Economists are also on the lookout for this cut as the likelihood of the United States falling into a recession may depend on the central bank’s decision. Meanwhile, U.S President Trump’s administration has been protesting how the bank has already reduced the growth of the country’s economy at a severe level, in spite of its current achievements. Market specialists say that this is not only about the Fed cutting rates, but also how much they are going to cut. A conclusion regarding the bank’s decision on their monetary policy is expected to arrive at the approaching FOMC meeting by the culmination of the month.

With the aim of normalizing their monetary policy, the Fed has been quite constant when it came to raising interest rates. However, their attitude regarding this policy shifted last March, when the bank indicated that there will be an absence of rate hikes for the rest of 2019 and assumed a track where they would sail to a September end without much effort towards the balance-sheet-reduction program. Not long ago, several Federal Reserve officials announced that reductions of rates have been realizable. 

 Nonetheless, there are essential factors that should be examined. A few of them questioned whether the rate cut will bring the necessary effect to the markets and what state the market should be before embarking on a reduction in rates. The big question is deciding what the long-term outcome that this rate cut may deliver.

By: Cyril Latrcice Cajanding