The Federal Reserve is set to cut interest rates by 25 basis points at its policy meeting this month, as the US central bank settles on a cautious approach to monetary easing despite political pressure for deeper stimulus. 

Recent public appearances by Fed officials have revealed a broad desire to move towards looser monetary policy to shield the US economy from risks related to trade tensions, weakness in global growth and persistent low inflation. Markets are pricing in further easing measures from the European Central Bank €” including possible rate cuts €” as soon as this week, while the Bank of England has recently adopted a more dovish tone. 

One of the clearest signs that the middle ground among Fed officials is in favour of approving a more limited stimulus in July came after the New York Fed clarified that an ultra-dovish speech from John Williams, its president, should not be seen as a guide to future policy.

About the Author: Glen Callow

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