Investors are betting that the US Federal Reserve will ease monetary policy as soon as next month, after a top official at the central bank admitted that market signals indicated that interest rates might be “inappropriately high”.
The Fed has planned to hold its current interest rate corridor steady at 2.25 per cent to 2.5 per cent through 2019, but investors have increasingly been speculating that slower economic growth could force it to cut rates before the end of the year.
Those expectations have been fanned by the US government’s recent decision to open up a two-front trade war with China and Mexico, leading economists to sharply mark down their forecasts for economic growth this year.