CIBC Research discusses its reaction to today's FOMC policy statement.
"The Fed opted to take action now, and ask questions later about whether the economy really needed the quarter point cut delivered today. The accompanying statement had to lay out the reasons behind the cut, namely concerns over the global business climate and soft inflation. But the Fed opted to reiterate that its base case is still for a sustained expansion with 2% inflation (no panic there), and opened by noting the solid recent news on labour markets and household spending. That's not a clarion call for a back to back cut in September, so for now we'll stick to our view that the next cut might await the October FOMC, and that a second quarter point reduction will be the last we see if the Fed's base case indeed pans out," CIBC notes.
"As statements accompanying a rate cut go, this one was not as dovish as it might have been, and the fact that there were two dissenting votes in favour of no move, and no votes for a 50 bp cut, will have markets paring back expectations for a more aggressive ease," CIBC adds.