The US Federal Open Market Committee (FOMC) is expected to meet on June 18 and June 19 to decide if at all a rate cut is on or will the members decide to remain uncommitted on the direction of the US interest rates after taking that neutral view the last round.
In the last FOMC meeting in early May, the committee concluded that they remain patient on any rate moves as economic data showed robustness, while inflationary threat remains imaginary then. Hence, the Fed Fund Rate (FFR) was held steady at the 2.25-2.50 range.
After more than a month since the FOMC meeting, a lot has changed in the economic and the trade war between the US and China as well as markets in May. For example, the S&P 500 itself lost some 6.6% or US$4 trillion in value last month – justifying again the view of “sell in May and go away” while the trade war between US and China has now escalated to the extent we are seeing not only more goods are subjected to tariffs but the tariff rate too has now been raised to 25%. Not to be missed out, President Donald Trump is also set to impose tariffs on goods imported from Mexico while against India, he is expected to remove the preferential trade status granted – a move that will potentially see some US$5.6bil worth of Indian goods exported to the US to be subjected to duties.
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