The Federal Reserve is this week expected to set the stage for lower borrowing costs as US inflation has taken a favourable turn and the labour market continues to soften.
The Federal Open Market Committee is poised to again hold its benchmark interest rate steady at a 23-year high of 5.25-5.5 per cent when its two-day gathering ends on Wednesday. While the rate decision itself looks to be uneventful, the meeting will serve as an important platform to further tee up a monetary policy pivot as early as September.
“The Fed is moving closer to a rate cut, and its communications this week should reflect that,” said Brian Sack, the former head of the New York Fed’s Markets Group, who is now head of macro strategy at hedge fund Balyasny Asset Management.