In the latest Federal Open Market Committee (FOMC) meeting, a majority of Federal Reserve officials supported a 50 basis point rate cut, citing inflation moving closer to the Fed's target and a weakening labor market as key factors. This group believed a larger reduction was necessary to stabilize the economy.
However, some participants favored a more cautious 25 basis point cut, arguing that it would provide sufficient monetary easing without being overly aggressive. Another perspective emphasized that the overall direction of rate cuts was more important than the size of the initial reduction, suggesting that the broader trajectory of monetary policy would have a greater long-term impact.
Source: Federal Reserve
Global markets traded cautiously as shifting Federal Reserve expectations and easing geopolitical risks continued to shape sentiment. President Trump warned he'll bomb Oman if it stands in Washington's way, as reports suggest Iran and Oman are moving toward a deal on Strait of Hormuz control.
Global markets started the week with the dollar under pressure as softer U.S. retail sales, inflation, and consumer sentiment reduced expectations for a September Federal Reserve rate hike.
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Cooling US Data Weakens Dollar Amid Energy Risks (17 – 21 August)Global markets entered the week with the US dollar under renewed pressure as softer inflation, retail sales, and employment data reduced expectations for another near-term Federal Reserve rate hike. The Dollar Index traded around 99.61, while markets assigned roughly a 65% probability that the Fed will keep rates unchanged at 3.50%–3.75% in September. Gold and silver extended their gains as the shift in Fed expectations supported precious metals, while the euro and pound benefited from the dollar’s declining yield advantage.
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