The Federal Reserve’s (Fed) policy conference kicks off on Tuesday and will be widely watched. Markets do not like surprises and the Fed has been doing a decent job of being transparent lately and that will have to continue. They may feel pressured to start signaling a possible rate cut if they see downside risks mounting due to trade uncertainty, slowing global growth, and weak inflation. The trade uncertainty is the real wildcard here, particularly with the surprise threat on Mexican imports. Additionally, with benchmark rates already at a low range, it will be important for the Fed to act quickly if they sense downside risks are increasing, since they do not have much room to lower rates.
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