The officials of Federal Reserve in this week have made an affirmation on their commitment of staying put on the rates of interest for the time being but the markets have been demanding something else. The futures market of the Fed, where the traders go for betting on the policy decisions of the central bank have been pricing in on a chance of 58% to see a cut in the rates by the month of June. The traders have even gone on to the extent of making room for two cuts by a chance of close to 60% for a move further lower in the month of December.
The expectations to see an easing have seen an acceleration since the spread of the coronavirus globally and this has threatened to affect the already slowing economy of China. The stocks have also surrendered their gains which they had in January and the bonds have been once more flashing a signal of recession via an inverted curve. The markets may then be bracing themselves against the chance of both a medical and economical problem in future.
The experts have said that the Fed is not going to separate itself from its human aspect however this is going to be about growth and whether growth is going to be affected by it. China is the second biggest economy in the world and if China suffers in demand, the world is going to follow suit as well. The impact will also be on the United States and this is going to make the Federal Reserve feel the need for a stimulus to boost the growth globally and for United States in particular.
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