We can gradually move toward neutral if incoming data continues to confirm our baselineWe may not be so far from the neutral rateMarkets seem to assume that we will need to move into accommodative territoryBut I don’t think such a step would be appropriate based on current conditionsHas a strong preference for a gradual approachThe costs of moving into accommodative territory could be higher than the benefits
This just mostly points to a 25 bps rate cut more than anything else as she dismissed the likelihood of moving faster by saying she would prefer something more “gradual”. As things stand, traders are still favouring a 25 bps rate cut for next month with the odds of that seen at ~71% currently.
This article was written by Justin Low at www.forexlive.com.
