Are we set for further rate cuts and potentially QE?
Tonight, we will witness the latest FOMC (Federal Open Market Committee) Minutes, from the Federal Reserve. The Fed been in the spotlight for their future monetary policy plans, following an interest rate cut in September. This is quite a change from last year which saw several hikes from the FED a potential further hikes during this year. The change in monetary policy momentum can be attributed to global economic uncertainty, the key catalyst being the ongoing US/China trade war.
Fed Chairman, Jerome Powell spoke yesterday and stated he felt there was no reason why the ‘monetary expansion could not continue’, with Powell indicating room for further rate cuts and even potentially the implementation of QE (Quantitative Easing). QE is essentially pumping money into the economy in order to stimulate growth. The USD strengthened following these comments since whilst typically these changes in monetary policy would weaken the currency in question, The Fed’s apparent determination to continue breathing new life into the current economic cycle was taken positively by investors. The Fed Chair also stressed this was ‘Not QE’ in its usual form but more designed to soothe concerns over short-term lending in the banking system.
US inflation data released tomorrow
Thursday sees the latest US inflation data released which might well hold some information which would relate to the prospect of the US raising or lowering interest rates and could be an event to monitor on US dollar exchange rates.
Brexit uncertainty continues to affect GBP/USD exchange rate
The lack of clarity surrounding Brexit continues to keep the Pound fragile against the US Dollar and now that a deal seems unlikely before 19th October, we could see further GBP weakness.
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