Bank of America Merrill Lynch discusses its call on the Fed monetary path in light of today's Fed Powell testimony before the Congress.

"Fed Chair Powell delivered a dovish testimony, hinting strongly at an upcoming cut. We now expect a 25bp cut at the upcoming meeting with a chance of a 50bp cut. We now expect a 25bp cut at the July 31st meeting followed by two more cuts at the next two meetings. We are sticking with our forecast of a cumulative 75bp of easing but we pulled forward the timing of the cuts. The Fed seems to be willing to dismiss the better data from the US and instead is focusing on the weaker global data. In other words, the Fed is taking out insurance with hopes of extending the recovery and ultimately gaining policy space," BofAML adds.