Despite a relatively upbeat overall economic assessment, the Federal
Reserve as expected cut its policy rate by an incremental 25 basis
points to a range of 1.50 percent to 1.75 percent with an implied
midpoint of 1.625 percent. The vote was 8 to 2 with Ester George of the
Kansas City Fed and Eric Rosengren of the Boston Fed once again
dissenting for no change, just as they have at each of the last three
meetings all of which have produced a 25-basis-point rate cut.
Yet
the need to cut rates isn't underscored in the economic assessment. The
labor market is once again described as strong and economic growth as
moderate and with household spending once again said to be rising at a
"strong pace". Business investment has been the sore point but today's
assessment is no worse than in September, once again described as "weak"
with exports, another trouble spot, once again also described as
"weak". Inflation is once again said to be "running below" the Fed's 2
percent target.
But it is weakness in business investment, the
result in part of slowing global demand for US exports, that's at the
heart of the Fed's efforts to stimulate growth, that also the need to
lift inflation back to their 2 percent target. Following its move to add
temporary liquidity earlier this month, the Fed announced no new repo
programs or balance sheet plans. Jerome Powell is up next at the
post-meeting press conference.
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