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

Restoring Quality of Life Through Joint Replacements | Alexander Sah

Restoring Quality of Life Through Joint Replacements | Alexander Sah

Transcript of Alexander Sah interview for the American Dreams Show, “Restoring Quality of Life Through Joint Replacements”: Alan Olsen:  So just for the listeners, I’ve had personal experience with you. You’re my surgeon who helped you do a partial knee replacement. And thank you very much. But for the listeners here, can you give us…

Dr. Linda Farley

Impact’19: Dr. Linda Farley

About Dr. Linda Farley Linda E. Farley, Ed.D, joined Girl Scouts Heart of Central California (GSHCC) in 2013 as its Chief Executive Officer. A lifelong advocate for youth development, Linda holds a doctorate in leadership from the University of St. Thomas, St. Paul. She has dedicated her career to creating opportunities for young people to…

Impact'19: Tom Kandris

Impact’19: Tom Kandris

About Tom Kandris Tom Kandris is a regional business leader from Northern California, and a serial entrepreneur and investor. Kandris spent the first half of his career entrenched in the semiconductor industry where he held domestic and overseas senior executive and board-level roles in major American, Japanese and European corporations. In 2000, Kandris cofounded PackageOne,…

Michael Beaudoin II

Impact’19: Michael Beaudoin II

About Michael Beaudoin II Michael invests in early stage companies, on behalf of Mark IV Capital. Previously, Michael created and operated AT&T’s Aspire Accelerator; and served as a Vice President at JPMorgan Chase and Deutsche Bank. Michael graduated with an MBA from Pepperdine and undergraduate from Ball State University. Bio Source: sched.com Interview Transcript of:…