Does anyone really think the Fed will cut 50 basis points in July?

Market is pricing in 100% chance of a cut. Personally, this is insane.

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S2007S said:
They won't do 50 basis points however I believe even if they do 25 basis points the markets will be excited they got a rate cut instead of nothing, plus they will rework the fed statement to be extremely dovish so that even if they do a 25 basis point the markets will like the dovish fed statement and catapult the markets higher!!
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Markets are already excited. This looks like a "buy the rumor, sell the news" event (at least for a 25 bp cut). I don't think we'll see a crash, but with markets at all-time highs and poor seasonality in August/September, I wouldn't be surprised if there's a moderate correction after the July 31 decision.
 
I personally think the Fed might cut starting with 25 bps, not because of Trump's pressure but because they are seeing strong signs of an imminent recession commencing in Q1 or Q2 of next year. Just look at important economic indicators such as the Leading Economic Index, Real Retail Sales, Aggregate Hours Worked - the writing is on the wall.
 
MKTrader said:
To be fair, the Fed was equally wrong to keep talking about raising rates when the market dropped 20% at the end of 2018. At the very least, Powell should've changed his tone earlier. I mean Obama had 0% rates for almost 7 years plus stimulus and multiple rounds of QE. And then he got full credit for a stock market boom! If I were his successor, I'd cry foul, too.
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Powell was appointed by Trump
 
In the central banking / academic economist world, the current belief in vogue is that CBs were behind the curve in both 2000 and 2007, and the ECB likewise reacted too slowly to Europe's double-dip in 2011-12.

Right now, asset prices are holding up but there are clear signs of economic weakness globally, as well as int'l dollar funding stress, plus added risks from the trade war. OTOH inflation is somewhat below the Fed's target (unemployment figures notwithstanding) and there's no clear credit or investment bubble with potential macro significance. Thus, it's really not unreasonable for the Fed to cut a quarter-point to keep markets calm and see if things stabilize.

Don't see any reason to cut 50bps, but you never know.
 
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