The US Federal Reserve is weighing “significant uncertainties” over the US and global economic outlook with markets expecting to see a shift in the interest rate policy.
After raising interest rates four times in 2018, the US Fed is now likely to shelve plans for further rate rise whilst considering a decrease. This expectation is in line with the March 19 Federal Open Market Committee meeting that decided to hold rates between 2,25 and 2.5%.
The Fed expects a slowdown in domestic demand and overall growth, although unemployment remains at multiyear lows. The Fed does not expect to meet the 2% inflation target.
US President Donald J. Trump has expressed his willingness to review the independence of the US Federal Reserve and is calling openly for lower interest rates to weaken the dollar and boost competitiveness.
The expectation of lower interest rates is also pushing down 10-year US Treasury yields.