US Fed Cuts Rates by 25 Bps; Trump Says Fed Has No Guts

September 18, 2019 | Alternative Investments, Headlines

As expected, the Fed cut interest rates to sustain the economy but was non-committal on future cuts.

Federal Reserve Chair Jerome Powell painted an optimistic picture of the US economy, citing buoyant labor markets and inflation nearing targets.

However, the 25 basis points rate cut addressed ongoing risks such as tepid global growth and trade wars.

In what is termed a “hawkish” rate cut, Powell gave no clue on the possibility of further rate cuts. “We are going to be highly data-dependent …. We are not on a preset course,” he said.

However, he did say that the Fed stood ready with “a more extensive sequence of rate cuts” should the economy wobble.

The Fed voted 7-3 on the decision to lower the overnight rate to a range of 1.75% to 2.00%. The central bank had previously cut rates in July.

The Federal Reserve also sharply cut by 30 basis points the rate it pays on bank reserves, in a move aimed at the crisis earlier this week in the short term borrowing markets.

The central bank faced a trade-off between lowering rates due to economic concerns and the risk that households and businesses may borrow excessively. Extremely low rates could fuel a moral hazard in the economy.

The Fed draws Trump’s ire again

Meanwhile, President Trump blasted the decision for just a 25-point cut. In a blistering tweet attack, Trump said Powell and the Fed had failed again. “A terrible communicator,” he tweeted, referring to Powell. “No guts, no sense, no vision!”

However, Trump’s focus appears to center more on the economic boost that lower rates should provide. However, the last 48 hours has seen a deterioration in the Repo markets and a massive injection of excess reserves by the Federal Reserve Bank of New York. Federal Reserve Chair Jerome Powell is trying to find the equilibrium that will keep banks lending and healthy it appears instead of focusing on just slashing rates to bolster growth.

Expect Trump to continue his barrage on the central bank as the year continues.

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.

Alt Insights

January 16, 2020

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

Latest Alternative Investment News

Digital Assets: Ray Dalio – Cash is trash; BTC is Untouchable; Libra Maybe; Stocks are Good; Gold is Best
January 24, 2020     Digital Assets, News

Ray Dalio, a long time bitcoin sceptic, again panned the cryptocurrency at Davos. Cash is trash; BTC is Untouchable; Libra Maybe; Stocks are good; Gold is Best, he said.

American Banking Association: M&A Expectations for 2020
January 24, 2020     Community Banking, Latest News, News

The American Banking Association has released its outlook for merger and acquisition activity in the banking sector in 2020. The ABA finds that the forces contributing to the consolidation of…

Private Equity: BGH Capital Makes Better Offer For Village Roadshow
January 24, 2020     News, Private Equity

Private equity firm BGH Capital has thrown its hat into the ring to acquire Village Roadshow. On Friday, BGH made an unsolicited counter-offer of $4 per share for Village. A…

Digital Assets: Square Granted US Patent For New Currency Exchange Network Including Cryptos
January 24, 2020     Digital Assets, News

Payments processor Square won the US patent number 10,540,639 titled “cryptocurrency payment network” for a new network that could seamlessly process crypto-to-fiat transactions and the reverse. The transactions would occur…