Everyone is now waiting for what the US Federal Reserve will say on Wednesday. While most expect it to keep interest rates unchanged, the decision itself is not what matters; rather, it is what the Fed will say after the meeting. People want to know: Will it start hinting at a future rate cut? Or will it maintain its hawkish stance? According to QCP Capital, the markets have calmed down a bit recently, due to the release of some good economic data and a decrease in tensions regarding the trade dispute between the US and China. Now, investors' focus is on two things: First, what will the Fed do? And second, what will happen in the US-China relationship? In this context, US President Donald Trump stated today that he does not intend to talk with the Chinese president this week. This statement alone concerns investors, as it may mean that matters between the two countries are not heading towards a near resolution. The problem here is that any new escalation between the US and China could cause prices to rise again, which means a return of inflation—a situation that confuses the Fed and prevents it from cutting rates even if it wanted to. Therefore, the real question now is: Will the Fed withstand all this pressure, especially from Trump who is calling for a rate cut? Or will it gradually retreat and start softening its stance?
