Agencies: Despite market volatility, the Federal Reserve is unlikely to cut interest rates urgently

Björn Jesch, global chief investment officer at DWS, said that despite the recent market turmoil, the Federal Reserve is likely to continue on its expected policy path. He said in a note that a panic-driven response from the Fed is unlikely, and he expects the central bank to try to avoid signaling a major shift in policy, such as a 50 basis point cut or an emergency rate cut between meetings. He expects the Fed to stick to a gradual easing approach, cutting rates by 25 basis points one by one over the next few months, starting in September. A recession in the U.S. economy cannot be ruled out, but given the overall strength of the economy and the robust balance sheet of the private sector, a recession, if it does occur, is likely to be mild. The DWS does not believe a bear market is imminent, but will closely monitor indicators that reflect systemic risk.