Here's everything you need to know about the next rate cuts
The fear of an upcoming recession and the measures taken by Central Banks to avoid it seems to be the only thing in the minds of investors right now. We know that sometimes researching about monetary policies may be hard, that's why we have summarised the most important upcoming interest rates decisions.
In the last meeting, Chairman Jerome Powell stated that the 25bps cut was just a “mid-cycle adjustment” which killed investors' idea of further easing coming.
The main elements watched by the Fed to cut rates again are the trade war, global growth declining and inflation below the 2% target. Since July’s meeting, the three previous elements are nothing but far from the goal. The global slowdown is advancing and trade tensions have escalated. Thus, analysts are predicting another 25 basis point cut in September, with the possibility of further cuts during the end of the year if the status quo does not change.
In July, prices in the Eurozone experienced a slight increase, however, they are still under the ECB inflation target. As the region’s growth rate is not getting any better, economists are expecting that the European Central Bank will be resuming the bond-buying strategy very soon (maybe they will be announcing it this week during the official meetings).
In the case of the EU, traders need to focus on the QE policy instead of interest rates, as the ECB is using quantitative easing as the way-to-go tool.
The most important monetary tool used by the People’s Bank of China is reserve requirement ratios, also known as RRR. According to many economists, the PBoC will be doing more cuts on those lending rates in the months to come.
Economists predict another 25bps in November. The RBA already warned investors that won't be making any cuts for now, as they are carefully analyzing the data before reducing interests.
Employment figures came significantly positive in August. In addition, RBA Governor Philip Lowe and the rest of the board expect the inflation to come out above the 2% target, which will be a good reason to not cut rates in the next meeting. However, the fact that trade tensions are escalating, may affect the Australian economy once more, adding more bullet points to the list of reasons to cut....