Don’t fight the Fed

WHEN the US Federal Open Market Committee (FOMC) met in December, the guidance given to the market was that the US Federal Reserve (Fed) had revised its guidance with a 75-basis-point (bps) cut in the Fed Fund Rate (FFR) this year from the current rate of 5.25%-5.50% range, based on its latest dot plot.

The minutes of the meeting released this week also showed that the Fed was rather concerned of a move to cut rates too soon for fear that the expected lower inflation rate is sustainable.