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Standard Chartered Bank released a report saying it expected to cut the target interest rate of US federal funds to 1.75% by the end of this year, i.e. 25 basis points in September and December respectively. It believed that increased trade uncertainty, coupled with continued deterioration in global economic growth, would cause concern to members of the Federal Open Market Committee (FOMC).
The bank had originally expected a target rate of 2% for the federal funds by the end of this year, reducing its forecast to 1.75% as it now expects a cut in interest rates in September.
According to the report, the extent to which the deterioration of global economic growth has hurt the U.S. economy remains uncertain, and there is no precedent for the Federal Reserve to rely confidently. The last time the Fed was cut by external shocks was in 1998, when emerging markets, especially China, accounted for a much smaller share of global GDP and contributed much less to global growth.
Standard Chartered Bank said that the underlying factors of the U.S. economy are still robust, supported by strong labor markets and consumer spending. However, the synchronization and leading indicators of manufacturing industry have continued to decline. Construction industry performance has also weakened, and business climate indicators have also raised warning signals. Strong US dollars, rising unit labor costs, supply chain disruption and reduced overseas revenue may later squeeze corporate profits and cut jobs.
The report points out that the US core inflation rate is still below the medium-term target of 2% set by the FOMC. Against this background, it is believed that the FOMC will further relax in the second half of the year and expects that the policy stance will remain moderate until worries about trade and growth subside, core inflation rises to 2% or wages increase by 3.5% annually, which is roughly the peak of the latest cycle. Value.


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