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 L. Olsen, CPA, Wikipedia Bio
Proud sponsor of the AD Show.
COVID-19 Resource Center
MESSAGE FROM MANAGING PARTNER ALAN OLSEN Greenstein, Rogoff, Olsen & Co., LLP (GROCO) CPAs & Advisors remains committed to serving our clients. We hope this email finds you and your family well and in good health. If the COVID‐19 virus is affecting you or a loved one, we wish you and yours a speedy and…
Federal Tax Return Filing Deadline Moved to July 15, 2020
Federal Tax Return Filing Deadline Moved Now that both California and the Federal IRS April 15 tax deadlines have been extended, most taxpayers and businesses will have more time to file and make tax payments without interest or penalties. From the IRS Website “WASHINGTON — The Treasury Department and Internal Revenue Service announced today that…
Tax Payment Due Dates – Updated Information as of March 19, 2020
Federal and some state tax authorities have responded to the Coronavirus by announcing extensions of some tax payment deadlines for most taxpayers. At BPM we are monitoring these announcements and will provide updates as additional information becomes available and as additional formal guidance is issued. Federal Coronavirus Update Treasury Secretary Mnuchin stated publicly on March…
Filing Deadline Updates, IRS and California FTB
Filing Deadline Updates, IRS and California FTB. The IRS has set up a “Coronavirus Tax Relief” page on their website. We expect, as additional information becomes available and formal guidance is issued, it will be accessible on that webpage. Federal and state tax authorities have responded to the Coronavirus by announcing extensions of some tax…