Jerome Powell, President Trump’s “emotional support dog,” cut interest rates for the first time since the Great Recession of 2008 to support Trump. Below is a synopsis of the Fed’s comments and my interpretation:
Fed’s Comments
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
My Interpretation:
The Fed has been hinting for weeks that it was open to cutting interest rates. Financial markets melted up in anticipation of a rate cut. The Dow Jones hit a 52-week high or 27,398 on July 16th. It closed at 26,824 Wednesday down over 333 points …
Trump chastised his emotional support dog for not making a deeper rate cut.
….As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!
— Donald J. Trump (@realDonaldTrump) July 31, 2019
We all know what that means … Read more:
