The Federal Reserve Reduces Interest Rates Once More

By Harvey S Katz – Re-Blogged From Value Line

In a widely telegraphed and, therefore, fully expected move, the Federal Reserve Board voted to reduce its federal funds rate target by another 25 basis points this afternoon. That was the second such rate cut in as many meetings and followed a decade in which there had been no reductions–only increases in 2017 and 2018.

However, the central bank did not signal that there would be additional rate action this year, which disappointed many traders and sent the stock market down sharply in the minutes following this rate move. In fact, after dawdling at modestly lower levels through the morning and early afternoon, the Dow Jones Industrial Average quickly fell to a session-worst 185-point setback.

In its interest-rate decision, the central bank pointed to the generally solid labor market and strong household spending activity. The Fed also cited continuing low inflation for its latest rate move, while not acknowledging that inflationary measures did pick up in August.

The vote, meantime, was split, with one Fed member calling for a 50-basis point move; two others again opining for no reduction; and the rest in line with the 25-point action. Finally, although the bank did not point to additional rate moves this year, it also did not close the books entirely on such action.

CONTINUE READING –>

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s