'Insurance' rate cuts could be risky; more tools needed to combat slowdown

AS a wave of central banks led by the US Federal Reserve signal intent to cut rates, the siren of warnings against the potential risks of pre-emptive "insurance" rate cuts has grown louder.

Last week, Fed chairman Jerome Powell, who is under pressure from US President Donald Trump to cut rates, repeatedly cited economic uncertainties and muted inflationary pressures in laying out the case for easier US monetary policy.

Markets are no longer questioning whether the Fed will cut rates, but rather by how much. The first cut is widely expected to happen at the next Federal Open Market Committee (FOMC) meeting on July 30-31. Investors are also expecting two more rate cuts later this year.