David McNamara: Divergence grows between Fed and markets on rate expectation

Comments from prominent Governors calling for a rate cut as soon as July suggest upcoming Federal Open Market Committee meetings may be more fraught

President Trump may select a new Fed Chair early, in an attempt to undermine the authority of Jay Powell.

The recent moves in US rates and the dollar highlight a growing divergence between the Fed and markets, amid signs of division on the rate-setting Federal Open Market Committee (FOMC).

With the Fed’s latest ‘dot-plot’ indicating very little change in the median rate expectations of members compared to the March forecasts, it appeared the Fed was content to sit on the sidelines until the autumn at least.