Fed officials remain divided over future rate policy though.
In line with market expectations, the Federal Reserve cut interest rates to the 1.75% to 2% range on Wednesday in its effort to protect the U.S. economy against uncertainty over trade and slowing global economic growth.which will be the second consecutive one this year following a “mid-cycle adjustment” earlier in July.of the quarter point rate cut, indicating more division than was expected.
“We took this step to keep the economy strong,” Powell explained in his opening remarks. The Fed indicated it will “act as appropriate” to sustain the economy’s “moderate rate” of expansion.within the Fed’s boardroom, as opinions differed over mixed U.S. economic data and whether to institute more quantitative easing.
The market had already priced in dovish expectations for another rate cut, so the news doesn’t come as a shock—but the Fed’s division over future rate policy was greater than expected and will add to investor uncertainty. The quarter-point rate cut also aggravated President Trump, who has repeatedly criticized the central bank’s monetary policy. He recently called for rates to be reduced to “Looking ahead:
A few more rate cuts could be needed to prop up a slowing U.S. economy as well as reduce pressure on the inverted yield curve. It remains to be seen whether the Fed plans on additional rate cuts beyond this year, as further accommodation could be needed to thwart geopolitical risks including the China trade war, tensions in the Persian Gulf and even Brexit.
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