We expect the Fed to cut its key policy rates by 25 bp at next week’s FOMC meeting – which would be the second consecutive rate cut in the current easing cycle – taking the Fed Funds corridor to 1.75-2.00% with an Interest On Excess Reserves (IOER) rate of 1.85%. Two hawks will likely dissent...again. We expect the Fed to signal its intention to “act as appropriate to sustain the expansion”, which we take to mean that more rate cuts are likely if and only if the outlook worsens. The outlook has worsened, though – perhaps enough for the new dot plot to show a third rate cut later this year. Market implications A rate ... (full story)