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Fed Members Not All-In on Further Rate Cuts: Fed Minutes

Published 08/21/2019, 02:00 PM
Updated 08/21/2019, 04:02 PM
© Reuters.

© Reuters.

Investing.com - Federal Reserve policymakers highlighted concerns about slowing global growth and trade tensions as headwinds, but stopped short of suggesting that a series of rate cuts should follow, according to the minutes of the Federal Reserve’s July meeting released Wednesday.

"Most participants viewed a proposed quarter-point policy easing at this meeting as part of a recalibration of the stance of policy, or mid-cycle adjustment, in response to the evolution of the economic outlook over recent months," the Fed minutes showed.

The Fed suggested that the best course of action would be to remain "flexible" and monitor incoming economic data amid uncertainty over when risks weighing on the economy, including the U.S.-China trade war would be resolved.

"In their discussion of the outlook for monetary policy beyond this meeting, participants generally favored an approach in which policy would be guided by incoming information and its implications for the economic outlook and that avoided any appearance of following a preset course," according to the release of the minutes.

The Federal Reserve cut its benchmark rate by 25 basis points to a range of 2.0% to 2.25% from 2.25% to 2.5% on July 31.

At its July meeting, the Federal Reserve cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as reasons for cutting rates for the first time since the 2008.

But the decision to lower rates was not unanimous, the minutes showed. Esther George and Eric Rosengren dissented largely because economic indicators suggested the economy remained somewhat robust.

The minutes drew a muted reaction in markets, with many looking to Fed Chairman Jerome Powell's speech at Jackson Hole, Wyo. on Friday for further clues on monetary policy. Some also claimed the minutes were largely a non-event as the July meeting took place before President Donald Trump proposed to slap new tariffs on China. The tariffs, however, have been pushed back to Dec. 15 from from Sept. 1.

“If (Powell) believes that risks may warrant a ‘somewhat’ lower path for policy, then a 25bp cut will be confirmed and market pricing, which currently rests above that level, will need to adjust,” Morgan Stanley said in a note.

Powell has faced relentless pressure from Trump to deliver a big rate cut.

Trump claimed earlier this week that Powell had a “horrendous lack of vision" and called on the central bank to slash rates by 100 basis points and renew “some” quantitative easing. Today he likened Powell to a golfer that can’t putt with “no touch.”

The Fed, in its July statement, pledged to end its balance sheet shrinking program at the end of the month, two months earlier than initially anticipated.

Latest comments

The Fed rate monitor on this site says a rate cut of a quarter point to a half point is at 96.9 percent.
Could this move be quantitatively sound and solid enough to change the trajectory of the 2 and 10 Yr bonds?
I would say let the Fed take rates to zero but that wouldn't be enough and we would have to keep hearing the same old thing.
You are now seeing the management style of a D-I-P.
Everyone who thanks we need bad cuts is out of their mind or a millennial. In this environment we actually need to raise rates because we do not have the ammo when a real recession hits. The economy is so strong it’s ridiculous to be even having this discussion. The market has priced in 150 basis point cut by December. Wait till 2600 or lower on the S&P because everyone is offsides
If they dont cut it will be a bloodbath
Feds meeting on Friday will move markets for sure.
Lets pray it moves them up we have been stuck for 2 years
trump is going to devalued dollar to 12 % anytime soon
Can you rephrase that please?
My friends, your président may soon announce a dollar devaluation .... around 10%... It is thé only reason why french and germain bounds are rising so quickly ... and thé rush for gold is another clue..... buy quickly whatever is not valueted in américan money .... few days to act
The country is lead by a dictatorial narcist... he knows everything better than all the others... he believes... but do you believe it to? Well, don't.
Didnt you hear? He says he’s the “chosen one.” Good thing none of his base are religious else they would be offended... or arent faithful enough to about the comparison.
Trump : " I'm the chosen to destroy Americans for my own political agenda to look good because no one ever dare to create a trade war, now Powell must wipe my ****and clean up the mess I've created or it's his fault when US enters recession."
World growth 4% shrinks to 2.5% because of trade war. President Trump's goal vs. Fed. chair Powell's mandate- Core CPI 2.2%.
Trump is one pushing US economy into recession creating political storms with trade war around the world, If Powell surrenders Trump will continue to make false claim it's Powell's fault while we are entering recession. Step up and kick Trump's ***Powell !
Can someone explain why they call it a cut, while in July is went from 2 to 2.25? Seems like an increase to me instead of a cut.
huh... it was 2.5 - 3. it is a range...
At this point Powell is the goat.
Meltdown awaits if the hawk shows up...
Powell wants to destroy Trump's chances of reelection.
I think Powell just wants to do his job without being hammered by the president every day.
Remember who hired him... hahahaha....
The apprentice showman lol
Never gonna happen murrey
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