Fidelity over de Fed: 'Insurance cuts' zijn eerder al succesvol gebleken

Aug 1, 2019

Na negen renteverhogingen in de afgelopen vier jaar heeft de Fed zojuist een renteverlaging van 25 basispunten doorgevoerd. Hieronder vindt u het commentaar van Rick Patel, portfolio manager bij Fidelity International:

'Although the US economy is still expanding at a relatively healthy pace, continued below-target inflation, a slump in business investment, and the prolonged presence of external uncertainties provided sufficient reason for a precautionary cut. Indeed, the Fed left the door wide open for a further cut later in the year by stating that it will ‘continue to act as appropriate to sustain the expansion.'

''Insurance’ cuts were successful in 1995-96, when the Fed implemented three cuts within seven months, taking rates from 6.00 per cent to 5.25 per cent, and managed to extend the economic upcycle by another six years to early 2001.'

'In the current cycle, it is likely that, unless incoming economic data improves significantly during the next couple of months, a further cut will be implemented later this year. The Fed indicated that it will remain data-dependent in determining the timing and size of future rate adjustments, with the reference to ‘size’ indicating that a larger than 25bps adjustment remains a possibility as a next step. Thereafter, assuming that the cuts have at least some of the desired effects and inflation expectations move closer to the targeted range, we would expect the Fed to be very reluctant to use up its firepower before the next real recession hits.'

'The Fed also announced that it will halt its balance sheet reduction program in August, two months earlier than originally planned. A move that should not come as a surprise given the easing move implemented today.'