Fed policy is turning preemptive

The Federal Reserve (FED) lowered its Fed Funds Rate by 25 bps to 1.75%–2.0%, the second such cut since the start of the year. The labor market is strong and economic activity is rising at a gradual rate even as global headwinds continue to cloud the outlook for monetary policy. The slowdown in global growth, rising geopolitical tensions, Brexit and trade tensions between the two biggest economies are causing business investment to wane with muted inflationary pressures. This has caused the FED and other Central Banks to turn accommodative.