Economic Quarter in Review

Chris Low, and Rebecca Kooshak
Q3 2019: Central Banks Reassure with Stimulus

The third quarter began with a series of Fed speeches focused on below target inflation expectations, which highlighted how restrictive a 2.5% Fed Funds Rate actually was. That gave rise to Powell’s semi-annual Humphrey-Hawkins testimony, during which he confirmed, “the neutral interest rate is lower than we thought…so, monetary policy hasn’t been as accommodative as we thought.” Along with fresh trade disputes with China, the door opened to two rate cuts during the quarter. Data slowly tipped negative, indicating two 25bp rate cuts would not be enough.

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