Commenting on the US Federal Reserve’s decision to hold its base rate steady, Melanie Baker, senior economist at Royal London Asset Management, said:
“As expected, the Federal Open Market Committee decided against cutting rates; but there were signals in the dot plots, the statement and Powell’s commentary that clearly opened the door to a rate cut later this year, potentially soon, depending on how things evolve. Powell reiterated several times during his press conference that they wanted to see whether uncertainties continue to weigh on the outlook.
“A rate cut looks more likely than not in the second half of this year. If trade tensions escalate even further, more cuts seem likely to follow. The continued shift in Fed stance is clearly welcome news for global growth prospects all else equal.”
About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £139 billion of assets and employs 113 investment professionals as at end July 2020. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.
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