Fed Members Not All-In on Further Rate Cuts: Fed Minutes

Fed Members Not All-In on Further Rate Cuts: Fed Minutes
imageEconomic Indicators7 minutes ago (Aug 21, 2019 02:15PM ET)

(C) Reuters.

Investing.com – Federal Reserve policymakers highlighted concerns about slowing global growth and trade tensions as headwinds, but stopped short of suggesting that a series of rate cuts should follow, according to the minutes of the Federal Reserve’s July meeting released Wednesday.

“Most participants viewed a proposed quarter-point policy easing at this meeting as part of a recalibration of the stance of policy, or mid-cycle adjustment, in response to the evolution of the economic outlook over recent months,” the fed minutes showed.

The Federal Reserve cut its benchmark rate by 25 basis points to a range of 2.0% to 2.25% from 2.25% to 2.5% on July 31.

At its July meeting, the Federal Reserve cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as reasons for cutting rates for the first time since the 2008.

In the press conference that followed the July rate cut, Federal Reserve Chairman Jerome Powell characterized the rate cut as a “mid-cycle adjustment,” playing down expectations that a series of rate cuts would follow in the coming months.

Powell has the opportunity to elaborate on the Fed’s thinking on monetary policy in a speech at Jackson Hole, Wyo. on Friday.

“If he believes that risks may warrant a ‘somewhat’ lower path for policy, then a 25bp cut will be confirmed and market pricing, which currently rests above that level, will need to adjust,” Morgan Stanley said in a note.

Powell has faced relentless pressure from President Donald Trump to deliver a big rate cut.

Trump claimed earlier this week that Powell had a “horrendous lack of vision” and called on the central bank to slash rates by 100 basis points and renew “some” quantitative easing. Today he likened Powell to a golfer that can’t putt with “no touch.”

The Fed, in its July statement, pledged to end its balance sheet shrinking program at the end of the month, two months earlier than initially anticipated.

Fed Members Not All-In on Further Rate Cuts: Fed Minutes

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