At this point, it’s pretty much a given that the Federal Reserve Board is going to cut interest rates at the Federal Open Market Committee meeting on July 30-31. However, there’s some interesting cognitive dissonance coming from the latest Fed beige book released last week. Domestic economic activity is seen expanding modestly amid trade fears, the Fed’s report said last Wednesday. The beige book survey is derived drawn from business contacts across the U.S. the central bank’s 12 regional banks.

The report stated: “The outlook generally was positive for the coming months, with expectations of continued modest growth despite widespread concerns about the possible negative impact of trade-related uncertainty. That’s not what I would call a ringing endorsement for rate cuts. It seems that the Fed is trying to anticipate a recession. While that sounds all well and good, I have very little faith in any government institution being able to do that, or “manage” a $21 trillion economy such as ours.

So despite an economy that seems healthy and not recessionary, the Fed’s chairman, Jerome Powell, has clearly signaled in recent weeks a cut of the Federal funds rate is on the way. The sharp drop in yields demands it. Whether the expected end of month cut is 25 basis ...

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