Central Banks

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The Federal Reserve as expected cut rates to 2.00 -.25% after a two day meeting on Wednesday with Jerome Powell as Chairman. Markets had priced in a 67% chance of the Change. Says Labor market remains strong with moderate economy.

 Fed Boardroom

Federal Reserve September FOMC Meeting 

Federal Reserve Announcement Wed 18 August 2019 14:00:00 ET

FOMC Benchmark Interest Rate Lowered; Target Range Stands At 1.75-200%

Interest Rate On Excess Reserves Unchanged At 1.80% 

Highlights

  • Fed funds target rate lowered to 1.75%-2.00%
  • Prior Fed funds rate was 2.00%-2.25%
  • IOER lowered to 1.80% vs 1.85% expected
  • IOER spread widened to 20 bps
  • Statement repeats that economic activity is rising at a moderate rate
  • Repeats the labor market remains strong
  • Repeats will act as appropriate to sustain expansion
  • Repeats inflation running below 2%
  • Bullard voted to lower rates more aggressively,
  • George and Rosengren voted for no cuts
  • George and Rosengren dissented previously for no cuts

FOMC Statement and Press Conference September 18, 2019 14:30 ET

September 18, 2019 Federal Reserve issues FOMC statement For release at 2:00 p.m.EDT

Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair, John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles.

Voting against the action were James Bullard, who preferred at this meeting to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent; and Esther L. George and Eric S. Rosengren, who preferred to maintain the target range at 2 percent to 2-1/4 percent.

Federal Reserve August FOMC Statement Changes via RANsquawk @RANsquawk

 

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Source: Federal Reserve

From the TradersCommunity Research Desk

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