Fed Lowers Interest Rate, Still Undecided on Future Cuts

Fed Lowers Interest Rate, Still Undecided on Future Cuts

Recently, it was reported; the Fed lowers interest rate, still undecided on future cuts.  Amid much disagreement and uncertainty, the Federal Reserve lowered the national lending interest rate to a target range of 1.75 percent to 2 percent last week. Although the move was highly anticipated, it didn’t come without criticism from both sides of the issue. Additionally, the Reserve gave little indication as to its plan for future reductions later this year. The quarter-point drop in the federal interest rate comes just two months after the Federal Open Market Committee made its first cut in 11 years.

There were plenty of reactions, including from the stock market. All the top U.S. stock exchanges took hit downward after the Fed announced its decision. The Fed also cut the interest it pays on excess reserves by 30 basis points. They made the decision in hopes of keeping the funds rate within its target range of 1.75-2 percent.

Not a Unified Decision

There appears to be much division among the individual policymakers regarding further cuts this year. Three Fed regional presidents voted against it. Even this current cut came with much disagreement. According to the Fed’s “dot plot” of individual expectations, five members of the committee felt the Fed should have held its previous range of 2 percent to 2.25 percent. Five other committee members approved the 25 basis point cut. But they also want to keep the current rates at the same figure for the remainder of the year. The other seven members favor at least one additional cut at some point this year.

Not Giving Much Away

But the committee didn’t really shed much light on what it ultimately plans to do down the road. According to the policy statement, there wasn’t much else to help predict the future. The committee gave the same reason for the cut as it did in July saying “the implications of global developments for the economic outlook as well as muted inflation pressures” were the primary reasons behind the cut.

The President Isn’t Happy

Among those who were unhappy with the Fed’s decision was President Trump. Trump called the policymakers, “boneheads” for not cutting rates even further. Trump said the committee chairman and his associates have “no guts.” According to the president, the fed is taking a big risk with the country’s ability to compete globally. He said by keeping rates much higher than most of the rest of the developed world, the U.S. will have a harder time competing.

Fed Not Looking to Drive rates Lower

The Fed’s decision to make cuts now comes at a critical time in the country’s economy, as well. There were recession concerns during the summer, as the trade war between China and the U.S. heated up. But the committee felt that things had stabilized recently. And Fed Chairman Jerome Powell said these cut was not part of a more aggressive strategy to drive rates lower. Instead, he said the cuts were more of a “mid-cycle adjustment.”

We hope you found this article about “Fed Lowers Interest Rate, Still Undecided on Future Cuts” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe to our YouTube Channel for more updates.

Considerately yours,

GROCO, GROCO Tax, GROCO Technology, GROCO Advisory Services, GROCO Consulting Services, GROCO Relationship Services, GROCO Consulting/Advisory Services, GROCO Family Office Wealth, and GROCO Family Office Services.

Alan Olsen, CPA

 

 

Alan L. Olsen, CPA, Wikipedia Bio

 

 

Proud sponsor of the AD Show.

American-Dreams-Show-Accounting-firm-in-ca-cpa-tax-advisors-groco-alan-olsen

A Guide to Family Business Decision Making

The topic of group decision making has spawned many academic studies, books, and white papers.  It is never easy to get a group of human beings to make a decision together; it’s hard enough for a single individual to make a decision!  Add to the mix more people with their cultural differences, values, needs, desires,…

State of Real Estate in The SF Bay Area: A Moment with Nancie Allen, Broker at Masterkey Real Estate Advantage

Transcript of Nancie Allen interview, “State of Real Estate in The SF Bay Area”: Alan Olsen: Can you walk us though your career path?   Nancie Allen: I’m a born and bred Fremont resident. I moved here when I was 2 and I went to the public schools here. I still live about a mile…

Miko Matsumura

Where the Future of Cryptocurrency is Headed? Miko Matsumura, Co-founder of Evercoin

Transcript: Alan Olsen: So Miko you are a cereal entrepreneur founder of crypto currency company; you have done a lot in your life but for the listeners, can you bring us a history of your timeline of what brought you up to where you are to day and what brought you to the crypto currency…

Vic Merjanian

The Next Gen 911 | Vic A. Merjanian

Interview Transcript of: The Next Gen 911 | Vic A. Merjanian Alan Olsen: Can you share a little about your background with us?   Vic A. Merjanian: Many years ago I was at UCSD as an undergrad and I found myself in situations with friends with family and we needed help. But there wasn’t really an…