EDITOR'S NOTE
Federal Reserve Chairman Jerome Powell delivered the quarter-point rate cut that the market had long expected, and stocks offered a muted reaction to the news. The Fed offered investors few clues as to future moves, sticking mostly to its previous promise to act as appropriate to sustain the U.S. economic expansion, now in its 11th year. In a press conference following the announcement, Powell repeated his message that the Fed is living meeting by meeting, analyzing data as it arrives.
The Fed's voting members were divided on the decision with one voting for a larger, half-point cut, and two others voting for no cut at all. This was the largest number of dissenters in a Fed move since December 2014 and reflects differing views of the trade war, a global economic slowdown and worries about a possible U.S. recession.
"There's the increasing gap in what people are thinking," said Ben Jeffrey, rate strategist at BMO. "It's a testament of how uncertain things are and there's a difference of views, whether it's on trade war or how monetary policy in Europe will shake out. "
President Donald Trump, who has been bashing the Fed on Twitter and demanding a larger cut, was predictably fast on his fingers. "Jay Powell and the Federal Reserve Fail Again. No "guts," no sense, no vision! A terrible communicator!" he tweeted following the Fed's announcement.
Trump has pointed out that other central banks have set negative rates. But Powell said he does not believe the Fed will ever resort to negative rates, instead relying on asset purchases and forward guidance, as it did following the 2008 financial crisis. For now, though, Powell foresees continued moderate growth for the U.S. economy.
Second guessing the Fed is practically a national past-time that will continue between now and the next Fed meeting in October. But for all the market strategists who think they know what the Fed is going to do, it seems from today's announcements that the Fed doesn't even know what the Fed is going to do.
"Sometimes the path is clear," Powell explained, "and sometimes less so."
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Rabu, 18 September 2019
Fed lowers rates | But more rate cuts coming? | FedEx feeling the pain
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