In its December forecasts, the Federal Reserve estimates that the policy rate will hold steady through 2020. Will economic and trade developments change that view?

Fed Chair Powell signaled that another “insurance” rate cut is unlikely. Instead, further rate cuts are contingent on a more material deterioration in the economic outlook.

The Fed has another lever to pull to ease monetary policy, one that could increase savings rates and create more disposable income.

Weakness in the U.S. economy leaves it vulnerable to shocks. We think the Fed will respond with additional easing this year.

That fiscal policy is becoming the new monetary policy when it comes to fighting recession was a key conclusion of PIMCO’s Secular Forum, and this was the message ECB President Mario Draghi underlined through both actions and words.

Even with additional cuts, we think economic growth could slow to a below-trend pace and prompt the unemployment rate to rise over several subsequent quarters.