Fed's rate cut comes with caveats, leaving investors lukewarm

Investors look set to face a volatile few months ahead after the US Federal Reserve resumed interest rate cuts and opened the door to further easing but tempered its message with warnings of sticky inflation, sowing doubt over the pace of future policy adjustments.

- REUTERS

Some investors are now less certain that a rapid shift to lower borrowing costs will materialise, potentially dampening optimism that stocks and bonds would get a strong lift from easier policy. Adding to the uncertainty was a wide variety of views within the Fed on the future path of rates.

“We've had a rather cautious, not necessarily fully defensive view here for a while,” which was “reinforced” by the Fed’s message, said Larry Hatheway, global investment strategist at the Franklin Templeton Institute.