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.

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.

The risk of recession has risen, but it’s not a foregone conclusion.

The last few days have highlighted the inherent fragility in markets – and the growth outlook globally.

It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative.

Come the fall, the ECB will likely deliver yet another easing package that could effectively deplete its monetary policy toolbox.

We find the Fed’s statement clear, and we expect another rate cut as soon as September with possible additional cuts thereafter.