UNITED STATES

摘要

As expected, the FOMC cut the Fed funds rate on July 31 by a quarter point to 2%-2.25%. Two FOMC members dissented in favour of keeping rates unchanged. In the face of pointed pronouncements by President Trump calling for looser monetary conditions, the Fed is keen to maintain its policy-making independence and cited instead signs of softer activity as justification for the rate reduction, as well as heightened concerns overtrade. Indeed, the following week, the White House imposed a further 10% tariff on US$300bn of Chinese goods. In retaliation, Chinese government companies stopped purchases of US agricultural products. This will hit domestic farmers, for whom China is the largest importer of US soybeans. Despite the August 13 announcement of a 'delay' to the 10% tariff (on some products), sentiment has been roiled by uncertainty. The spot price of gold hit US$1,521 per ounce for the first time in six years, while market traders rushed to buy government bonds on August 14, driving down 10-year yields to the point where the US yield curve has become inverted - which some say is a harbinger of possible recession. Another rate cut is now expected in September.