- We can gradually move toward neutral if incoming data continues to confirm our baseline
- We may not be so far from the neutral rate
- Markets seem to assume that we will need to move into accommodative territory
- But I don’t think such a step would be appropriate based on current conditions
- Has a strong preference for a gradual approach
- The costs of moving into accommodative territory could be higher than the benefits
This just mostly points to a 25 bps rate cut more than anything else as she dismissed the likelihood of moving faster by saying she would prefer something more “gradual”. As things stand, traders are still favouring a 25 bps rate cut for next month with the odds of that seen at ~71% currently.
This article was written by Justin Low at www.forexlive.com.
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