The Fed turned more dovish than I anticipated, basically announcing a July rate cut as clearly as they could without taking out an ad in the Wall Street Journal. The story begins with the Fed’s statement. The Fed dropped its “patient” stance in favor of a pledge to “act as appropriate.” Given the increased “uncertainties” to the outlook and the “muted inflation pressures” the only logical direction for policy is to cut rates. This shouldn’t be a surprise – the proximity to the lower bound coupled with low inflation was always going to lead the Fed to err on the side of a rate cut. It just took them some time to find ... (full story)