The Fed is likely to signal plans to cut rates in September when it concludes its meeting on Wednesday, according to economists surveyed by Bloomberg News, a move they see as leading to quarterly rate cuts through 2025. Rate markets are pricing in a 100% September move, with the possibility of two more cuts by year-end, according to swaps data compiled by Bloomberg.
“While the July FOMC meeting may be too early to start cutting rates, it is not too early to start preparing for a September cut,” Stephen Gallagher, an economist at Societe Generale, wrote in a note to clients.
Hours before the Fed’s decision, the BoJ is expected to detail its plans to reduce bond purchases this month at the conclusion of its two-day policy meeting on Wednesday, while most economists also see a chance of a rate hike. USDJPY fell 2.4% last week as traders priced in more than a two-thirds chance of a 10-bps rate hike, triggering a selloff in risk-sensitive developed and emerging market currencies and sending the Nikkei 225 into a technical correction.