Fed to cut target range for federal funds rate by 25 bps on September 18 - Rabobank

Previewing next week's key Federal Open Market Committee (FOMC) meeting, "We expect the Fed to cut the target range for the federal funds rate by 25 bps on September 18," said Rabobank analysts.

Key quotes

"Repeating his mantra that the FOMC ‘will act as appropriate to sustain the expansion,’ despite the divergent views expressed by other Fed speakers, suggests that Powell is confident he has enough votes in the FOMC to make an insurance cut this month. However, we expect Rosengren and George to dissent from this month’s decision."

"In our view the feedback loop between trade policy and monetary policy is likely to lead to another insurance cut before the end of the year, most likely in October."

"Meanwhile, the inverted yield curve points to a recession in 2020 that will force the Fed to cut rates all the way to zero before the end of 2020."