Why Markets Fell After US Rate Cut

Published / Last Updated on 31/07/2019

Why did stock markets fall after US interest rate cut? Federal Reserve Deputy Chair said: "This is not the beginning of a long series of interest rate cuts."

The $ strengthened rather than weakening to drive markets down. A reverse of what investors were expecting as the Fed seems to be putting a cap on future interest rate increases.

A stronger $ means US imports are cheaper and US exports are more expensive.

In turn, US may have to cut prices of exports which may have a knock on effect for US economy as a whole.

Quite the reverse and not what was expected.

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