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US FOMC signals further rate cut

While Jerome Powell says the US economy is in a good place, the UK may today know the fate of Brexit after Boris Johnson's last-minute talks with Leo Varadkar.

Centtrip: US FOMC signals further rate cut

The US Federal Open Market Committee (FOMC) has released minutes from its September meeting, showing most policymakers (7-3) voted for the recent quarter-point interest rate cut to 1.75 per cent.

The minutes suggested that the US economy was “in a good place” – a point which Federal Reserve Chair Jerome Powell has reiterated on several occasions. However, fears of widening trade tensions and decelerating global growth continue to weigh on the US economy, with fed fund futures predicting the likelihood of a further, preventative rate cut at the end of October of 82 per cent.

Today is the day for US-Chinese high-level trade talks. Initially, Washington and Beijing were meant to negotiate for two days, but the South China Morning Post reported that deputy-level talks earlier this week made no progress and that Vice Premier Liu He would be leaving today, after only one day of talks. The issue appears to be of forced technology transfers between the two nations, which China has refused to negotiate on.

The lack of progress in the talks caused US stock markets to fall again yesterday, 9 October. The Dow Jones was down more than 300 points at one point, before recovering slightly after the FOMC signalled the potential for a further interest rate cut.

Also, today the UK Office for National Statistics (ONS) will release the GDP growth figures for August. Forecast to show that UK growth flatlined, the risk is that the slowdown in the services and construction industries will counter any increase in productivity caused by Brexit stockpiling in the manufacturing sector.

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