Jack McIntyre, portfolio manager at Brandywine Global, says that the actual cut of 25bps was the “least important component of the meeting” as it was already priced in by markets. He says that including the forward guidance components, the cut was a “hawkish cut”.
Following the US Federal Reserve (Fed)’s lowering of the benchmark interest rate for a third consecutive time on Wednesday, market watchers and analysts from various research houses say the cut was a “hawkish” one.
The move reduces the central bank’s Federal Funds Rate by 25 basis points (bps) to between 4.25% and 4.5%. “The dot plot and economic projections were hawkish. This suggests the US Fed is acknowledging last-mile inflation risks and potential upside pressure from the policies of an incoming Trump administration,” says Nomura’s Global Markets Research analysts.
