US: New Fed forecast
Overview: Yesterday’s inter-meeting cut by 75bp, see our `FOMC: Aggressive cut by 75bp to 3.5%´ note, signals that the FOMC is extremely worried about the current situation. To us, the event illustrates that the preferences of the FOMC imply an even stronger commitment to insure against adverse economic scenarios. On this background, we have revised our Fed call. The new forecast implies that the Fed funds target is reduced to 2% by the 25 June meeting. Details: The FOMC’s decision yesterday
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US: The Fed Slashes The Funds Rate 75 Basis Points
The Federal Reserve Board moved boldly this morning to calm global financial markets slashing the federal funds rate by 75 basis points to 3.50 percent. While the deterioration in global markets forced their hand today, the Fed is not done. We still expect an additional half point cut in the funds rate at the January 29/30 FOMC meeting.
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FOMC meeting outside the regular schedule
· The action taken by the FOMC is the more aggressive rate cut, in a single move, since October 1984 · Today’s rate cut is a response to the ongoing deterioration on financial market conditions and credit tightening for some businesses and households · Risks to the short-term economic outlook are clearly tilted towards the downside · The Fed’s action was approved with eight votes in favor and one against The Fed’s emergency interest-rate cut, one week before their scheduled meeting, was aimed
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