Central bankers frenzy

May and June have been busy months for central bankers. With the exemption of Brazil, every decision of interest rates has been dovish, which means an enormous amount of liquidity will be injected in the global economic system. It’s not clear yet if they are fighting deflationary forces, like China, Thailand and Switzerland, or if they’re fighting a slowdown, but the amount of global coordinated stimuli is notable. As for the Fed, after the FOMC meeting on Wednesday, the odds for a cut in September have jumped above 70%, and some comments by FOMC voting members are advocating for a cut in July, echoing the presidents urgency to cut rates and help lowering the cost of debt. Will J Powell bend the knee and lower rates? We’ll see. The combination of rate cuts and the OBBB can bring inflation back very quickly, but it can also help with the deficit and the debt, which is the biggest issue now for President Trump.

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