After Fed Chair Jerome Powell’s speech at the Jackson Hole symposium last month, odds of a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting have risen. The question markets are now asking is not whether the Fed will cut rates, but by how much.
While most believe that the Fed will start its loosening cycle with a 25-basis point cut, the clamor for a 50-basis point rate cut has also risen from many quarters. Fed rate cuts are generally positive for stocks – even as a 25-basis point cut for September now seems baked into stock prices.
