Wall Street Journal hints at why “A little dual easing soon” from the Fed could happen

The Wall Street Journal is gated:

• A Little Dual Easing Soon Could Help the Fed Avoid Major Easing Later

The ‘dual easing’ the article refers to is:

• The Federal Reserve is thinking about cutting interest rates and about slowing the pace at which its balance sheet shrinks.

And adds:

• On face value, both seem like letting up on the brakes on the economy. The two are separate decisions though, and the fact that Fed policymakers are considering them at the same time is pretty much happenstance. That said, the principle guiding both might be the same: Making policy a little easier soon minimizes the risk of having to make policy a lot easier later.

As for the Federal Open Market Committee (FOMC) meeting this week, it says

• there is little chance that the … will make any changes

But, what to watch:

• the Fed’s policy statement and Chair Jerome Powell’s postmeeting press conference on Wednesday will likely signal changes are afoot

There is more at the article if you can access but that’s the gist.

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The USD took a pounding, and ‘risk’ rallied on Monday afternoon:

• Forexlive Americas FX news wrap 29 Jan:US Treasury lower borrowing needs kickstart markets

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The announcement will be along at 1400 US Eastern time (1900 GMT) on Wednesday, 31 January 2024:

• Federal Reserve’s FOMC meet this week, Goldman Sachs expect on hold, with a cut in March

This article was written by Eamonn Sheridan at www.forexlive.com. Source