Implications for Markets as Fed Rate Decision Approaches

Markets widely expect the US Federal Reserve to cut interest rates for the first time in four years when policymakers meet this week. Jing Roy, vice president, director and portfolio manager of asset allocation with TD Asset Management, talks to MoneyTalk’s Greg Bonnell about the implications for markets and the economy.

Transcription

Greg Bonnell – This week, we have the event the markets have been waiting for all summer. The US Federal Reserve was expected to cut interest rates on Wednesday. What could this mean for the economy and markets as we head into the fall? Joining us now to discuss is Jing Roy, VP, Director and Portfolio Manager for Asset Allocation at TD Asset Management. Jing, nice to have you back on the show.

Jing Roy – Thank you for having me.

Greg Bonnell – So after all the talk all summer about this program in the financial press about the Fed, we finally get to the week. What do you expect from the Fed?

Jing Roy – We are finally entering a synchronized global rate cut cycle. So this week, the Fed is expected to join the Bank of Canada and the European Central Bank in starting the rate cut cycle. By the end of this year, the Fed is expected to cut by about 100 basis points, the Bank of Canada another 70 basis points, and the ECB another 40 basis points.

Greg Bonnell – Okay, so everyone starts moving with each other. When it comes to the Fed, you said 100 points before the end of the year. Do they have enough encounters to only make 25 basis points an encounter, or do we have to get a 50 in there somewhere?

Jing Roy – What’s the question… that’s the big one