FOMC will reflect it remains divided regarding policy easing – Standard Chartered

Analysts at Standard Chartered expect the Federal Reserve to lower the Fed Funds rate by 25bps to 2.00% and make minimal changes to statement. They expect two dissenting votes. 

Key Quotes: 

“Market pricing for the September FOMC event has turned less dovish recently on news of potential, if partial, trade agreement between the US and China and strengthening domestic inflation. We believe the committee remains deeply divided regarding the appropriateness of July’s cut, as well as possible cuts in the near future, and anticipate that the ‘dot plot’ will continue to reflect this; we expect little change to the economic outlook and see the median path of policy signalling a slight possibility of a third cut in 2019, after policy easing in July and, we expect, September.”

“We expect two dissenting votes.”

“We maintain our call for another 25bps cut in December this year, following the anticipated cut on 18 September.”

“If Powell uses the word ‘vigilant’ in the press conference, it would be a dovish signal that would suggest that the committee is contemplating at least one more rate cut in 2019.”