- 25 bps rate cut needed in April.
- US tariff announcement warrants more accomodative monetary policy.
- We need to move to a less restrictive policy stance.
- Worsening of trade tensions can be deflationary in the medium term.
- Policy is currently still more restrictive rather than neutral.
- Even with another cut, will still only be at the upper bound of neutral interval.
- US tariffs announcement much more disappointing that anticipated.
- Undershooting risk already up before April 2, must carefully monitor.
- In the medium term, undershooting or being at target is more probable than overshooting.
- In June, let’s see what has changed since April, then decide whether to cut again.
- I see no need to talk about 50 bps. That would be too much. We are not behind the curve.
This is not a surprise at all. The markets were already 100% sure of a cut.
This article was written by Giuseppe Dellamotta at www.forexlive.com.