Markets Have Priced In Future Interest Rate Cuts In The U.S.

Economists widely anticipate the U.S. Federal Reserve will lower interest rates at its next policy meeting in July.

On Wednesday, the Federal Reserve announced that it is leaving its benchmark interest rate unchanged at its current range of between 2.25% and 2.50%. However, the central bank altered the language it is using to discuss the state of the U.S. economy, removing the word "patient" from its language and saying that it is prepared to act on interest rates if necessary.

At its last policy meeting in May, the central bank said it would "be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate," and analysts focused on that desire for patience. But on Wednesday, "patient" was removed, and the bank signaled it is willing to cut interest rates this year.

"The [bank] will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion," said the U.S. Federal Reserve in a written news release.

"My colleagues and I have one overarching goal, to sustain the economic expansion."

U.S. stocks rose Wednesday after the decision and comments, and Treasuries erased losses. Yields on benchmark 10-year Treasuries fell to 2.03%. Fed funds futures have priced in increased odds of a rate cut at the July meeting and investors now see around 74 basis points of monetary easing by the end of this year. The U.S. central bank raised interest rates four times in 2018.