US Fed’s Rate Cut: What it Says About US Economy & Emerging Economies

(August 2019) Last week the US central bank, the Federal Reserve, lowered interest rates by a quarter of a point, a rate that was in line with general market expectations. It was the first rate cut since 2008. A constellation of factors created the opportunity for the Fed to lower rates, including: a stable US economic outlook, a strong labour market, overall inflation and core inflation remain below two percent, and reduced manufacturing output (which has fallen for two consecutive quarters in 2019). Below we explore these factors and briefly discuss what this might mean for emerging markets.