US Economics

Markets underestimating scope for rate cuts in 2020

US Economics Update
Written by Capital Economics Economist

Both the consensus and financial markets are coming around to our view that the Fed will cut interest rates in 2020, but we still think they are underestimating how soon and how fast the Fed’s policy cycle is likely to turn. We expect that a sharp slowdown in economic growth next year will prompt the Fed to stop hiking rates in June 2019, and ultimately trigger at least 75bp of cuts in the first half of 2020.