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“The case for providing accommodation has increased,” so says Federal Reserve Vice Chairman Richard Clarida today

Jun 21, 2019

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  • Federal Reserve Vice Chairman Richard Clarida gave an interview to Bloomberg TV and gave indications that the Fed is closer to cutting rates
  • When asked about the state of the US economy, he said, “The case for providing accommodation has increased.”
  • When talking about recent developments in the US economy, he added, “Especially in the last six or eight weeks, there has been elevated uncertainty about the outlook.”
  • This Wednesday the Fed used more dovish language in its statement following the FOMC meeting, saying uncertainties in the economy had increased
  • This language led most to believe a rate cut this year was now more likely and within a day Fed Fund futures priced a 25bp rate cut as soon as July
  • Today futures are pricing 75bp of rate cuts by the end of 2019
  • Clarida said the present state of the economy is “good” but the chance of a slowdown later in the year had increased
  • Clarida said the Fed will be focused on economic data from both the US and abroad as it analyzes whether or not to cut rates
  • At its most recent meeting, one Fed member already wanted to cut rates, with St. Louis Fed President James Bullard advocating a quarter-point rate cut
  • In a blog post from him, Bullard said he wanted a cut to protect against too-low inflation and weak growth
  • Bullard wrote, “Even if a sharper-than-expected slowdown does not materialize, a rate cut would help promote a more rapid return of inflation and inflation expectations to target,’’

 

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We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

More on the Fed

The bond market is speaking loud and clear, but is the Fed listening?

Can you see that in the distance? It's a Fed rate cut coming....for now Fed leaves rates unchanged

 

Some additional comments from Clarida from his interview

  • “The economy is hitting some cross currents now”
  • “There’s been a marking down in global growth prospects. There’s been uncertainty about international trade.”
  • “We’ll act as appropriate to sustain expansion”
     

 

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