Opening Statement from the August 2019 CCPM Forecaster
Originally published on August 4, 2019
On July 31, 2019 Fed Chairman Powell announced the most highly anticipated change in interest rates in more than a decade. With 100 percent of fed funds futures traders betting on a rate cut for several weeks prior to the Fed’s July FOMC meeting, the Fed did not disappoint when it announced a 25-basis point cut in the federal funds rate when it met.
During the weeks leading up to the FOMC blackout period (one week prior to the Saturday preceding an FOMC meeting and the Thursday following that meeting) investors interpreted Powell’s statements to mean that a rate cut would be coming during the July FOMC meeting. And because Powell failed to make statements that might otherwise cause investors to question whether a rate cut would be announced, he was essentially signaling to investors that rates would be cut during the July meeting.
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