Fed to open door for interest rate cuts: Barclays analysis

The Federal Reserve (Fed) will announce its new interest rate decision today. While experts wait for interest rates to be kept stable, they point to the month of September. Barclays, one of the world's largest financial services companies, also stated in today's customer note that the Fed cannot resist market expectations and will open the door of discounts for September.

The statements of Powell, the head of the institution, are eagerly awaited rather than the interest rate decision that the Fed will announce today. Whether Powell will give a discount message for September will also be decisive for the course of the markets.

'They can't resist expectations'

Julien Lafargue, chief strategist at Barclays Private Bank, the private banking and asset management unit of London-based giant financial services company Barclays, said in today's client note that the Fed will now open the door for September:

“The Fed is now expected to open the interest rate cut door for September. Markets are pricing a slightly over 25 basis points of interest rate hike for September. The Fed will struggle to counter these expectations. Although the organization will continue its data-centric disclosures, it will also admit that this data is on the right track. Thus, the possible monetary expansion in the coming months will be filled under.”

As it is known, the Fed made its last interest rate hike in July last year. The institution, which has left the interest rates stable since that period, made statements that inflation should reach 2 percent, especially.

However, although interest rates have been kept significantly above, inflation has been reduced to 3 percent so far.