Brian Cheung for Yahoo Finance:
The Federal Reserve cut interest rates by 25 basis points in its policy-setting meeting on July 31, marking the first time the central bank has reduced the benchmark interest rate since it battled the financial crisis in 2008. The Fed also decided to pre-emptively end its process of shrinking its balance sheet, a process known as quantitative tightening, two months ahead of schedule.
The cut comes as the Fed continues to worry about a possible slowdown in the U.S. economy… On the labor market, the Fed said job gains are still “solid.” The June jobs report received since the last Fed meeting showed an estimate-beating 224,000 new jobs with unemployment moving up only slightly to 3.7%. The Fed also said the consumer remains a bright spot, with household spending still growing relative to earlier this year.
The Fed reiterated that it will “act as appropriate to sustain the expansion,” adding new language in saying that this priority will be in focus as “the committee contemplates the future path of the target range for the federal funds rate.”
MacDailyNews Take: A bit of macroeconomic insurance? The Fed’s next meeting is scheduled for September 18th.
And AAPL goes down when, typically, stocks rise with a rate cut. Walking to a different beat, I guess. A little puzzled.
Market wants 3 cuts this year, but the Fed Chair implied there would be only one, so market threw a tantrum.
This sends a mixed message. Rate cuts occur when the Fed believes the economy is cooling off. They want to maintain the record Obama recovery that is threatened by the trade war.
Actually they raised rates to pay for some of the quantative easing Obama used to buy a so-called recovery.
Now they’ve lowered them for completely different reasons than the normal stagnant economy.
TT: your display in economic illiteracy is noted. Chairman Powell specifically stated many times that the Fed eased rates because the economic indicators — such as business confidence — are soft.
It also doesn’t help much that US businesses can’t find competent workers anymore, and aren’t allowed to gasp hire an immigrant without massive cost and delay. GDP growth continues to pace at or below that for Obama’s 8 years, and is slowing due to primarily due to Trump administration idiocy.
Hint: if the USA encouraged free & fair trade with responsible partners in the Americas and Europe, including sensible policies to allow movement of workers to allow them to go where the work is, then US Corporations would see less need to source manufacturing in Asia, software from India, and banking from the Caymans. Exactly the opposite of what this isolationist administration is doing. For years the GOP pushed for more worker permits to keep labor costs low in the USA, now the Trumpanzee xenophobes are killing any hope for US manufacturing resurgence.
yeah, got it. That make s soooo much sense.
The rate cut was suggested by Trump. Whilst the Fed is supposedly independent there certainly seems to be some influence here.
Trump wants to keep the economy growing at a fast pace and there has been some signs of slowdown (maybe related to the trade wars).
My concern is that a rate cut will fuel the typical boom and bust cycle that occurs. Many fat cats will make money this way but the average person will end up holding the can when everything goes belly up.