Fed cuts interest rates by quarter-point and ends quantitative tightening early

[mahatmakanejeeves]

Source: MarketWatch

Fed cuts interest rates by quarter-point and ends quantitative tightening early

Published: July 31, 2019 2:16 p.m. ET

Two panel members dissent in favor of no rate cut

By GREG ROBB
SENIOR ECONOMICS REPORTER

The Federal Reserve on Wednesday cut its benchmark interest rate by a quarter-point and ended its so-called "quantitative tightening" program two months early.

This was the first rate cut since late 2008. The Fed hopes it is "insurance" that will give the economy some momentum to better face a more uncertain global economic environment.

The policy-setting Federal Open Market Committee said it was easing monetary policy "in light of the implications of global developments for the economic outlook and well as muted inflation pressures." Analysts say uncertainty about President Donald Trump's trade fight with China is causing firms around the world to pull back investments.

Looking forward, the central bank seemed to step back a bit from promising a rate cut in September. ... It removed urgent language from the statement that said it was "closely" monitoring the data. ... In fact the stock market, long anticipating easier borrowing conditions, turned negative in the wake of the Fed's decision for an as-expected quarter-point move and the accompanying language.
....

There were two dissents to the Fed rate-cut decision. ... Both Kansas City Fed President Esther George and Boston Fed President Eric Rosengren wanted the central bank to hold interest rates steady.
....

Read more: https://www.marketwatch.com/story/fed-cuts-interest-rates-by-quarter-point-and-ends-quantitative-tightening-early-2019-07-31

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The Fed cut rates for the first time since 2008
https://www.cnn.com/2019/07/31/business/fed-rate-cut-july-meeting/index.html

By Donna Borak, CNN Business

Updated 2:14 PM ET, Wed July 31, 2019

Washington (CNN Business) -- The Federal Reserve on Wednesday lowered interest rates for the first time since the Great Recession in 2008 to help stave off the possibility of an economic downturn.

Policymakers led by Fed Chairman Jerome Powell voted 8-2 in favor of a small cut in the federal funds rate, and recommitted to their promise to "act as appropriate" to sustain the country's longest economic expansion in history.

Interest rates, which affect the cost of borrowing for credit cards and mortgages, are now set to hover between 2% and 2.25%.

The rate cut follows months of pressure from President Donald Trump, who has broken with his predecessors' practice of walling off the central bank from politics.

[underpants]

1. Trump will take credit

but it’s really not a good sign.

[IronLionZion]

2. If the Fed can be bullied so easily by this president

look for more insults to continue. Trump wanted a much larger rate cut and is going to try to bully them into it.

Markets are not rejoicing at the news. There are many signs of weaknesses in the economy due to tariffs and trade policy as well as the feeling that prices are artificially propped up with buybacks from the most cash-heavy companies.

[saidsimplesimon]

3. "Stocks turn negative"

Stocks turn negative after Fed decision to cut rates by quarter point
Published: July 31, 2019 2:24 p.m. ET

https://www.marketwatch.com/story/stocks-turn-negative-after-fed-decision-to-cut-rates-by-quarter-point-2019-07-31?mod=mw_quote_news

Chris Matthews Market Reporter

U.S. stocks flipped from modest gains to losses Wednesday afternoon, following the release of a decision by the Federal Reserve's interest-rate setting committee to cut the federal funds rate by a quarter point to between 2% and 2.25%, while ending its plan to reduce its balance sheet through the sale of government bonds two months earlier than expected. The Dow Jones Industrial Average DJIA, -0.14% fell by 77 points or 0.3%, to 27,125 and the S&P 500 SPX, -0.10% shed about 8 points, or 0.3% to 3,006. Meanwhile, the Nasdaq Composite index COMP, +0.10% lost 12 points, or less than 0.1% to 8,265. Lower interest rates are typically bullish for stocks, as they compress the yield investors earn on bonds and other debt, making equity investments more attractive in comparison. They also are thought to stimulate economic activity by lower borrowing costs for households and corporations. However, investors were widely expecting a 0.25% cut and equity investors appear to be disappointed the Fed didn't lower interest rates by more than a quarter point, or clearly signal that further rate cuts were on the way. Investors will get more clarity regarding the path of future policy during a press conference with Federal Reserve Chairman Jerome Powell, set to begin at 2:30 p.m. Eastern Time.

[mahatmakanejeeves]

5. "Buy on the rumor; sell on the news." NT

[saidsimplesimon]

7. Great slogan,

Alan Greenspan blamed the last major recession on "irrational market exuberance". Is it possible that jumbo don will set the next downward slide in motion?

[IronLionZion]

11. Dumbo Donnie is about as irrational as it gets

so much so that he publicly bullies the fed to cut rates to prop up his economy. A strong economy wouldn't need a rate cut to stimulate it.

[customerserviceguy]

9. Which is why I call stock markets "the casino". n/t

[CountAllVotes]

4. Make AmeriKKKa great again!

Puppet Powell is doing his job!

Will the rich get richer yet??

[durablend]

10. We us proles sure as hell won't

Awaits another rate cut from ally.

[Bengus81]

6. DOW DOWN 327 points right now.............

Tired of winning Trump?!!?!?!?

[watoos]

8. I keep waiting for Putin and MBS

to raise the price of oil. I'm surprised they are keeping the price down for so long when their economies rely so heavily on oil. Yes I said MBS and Putin raise the price of oil, I don't believe in the invisible hand of the market any more.

[IronLionZion]

12. They've completely decimated Venezuela through low oil prices

The US and Canadian oil companies would also benefit from higher prices.

[bucolic_frolic]

13. Monetary policy no longer has a lot of influence

We have overcapacity in everything. Every business has expanded, new ones have started up, all due to these 11 years of unprecedently cheap capital. Businesses are paying their loans on low margins due to all the competition, and steady if unspectacular profits. This will all change if the economy slows - ultra low profits and refi's. The Fed has no choice in the matter. We have a choice - a horrific shakeout and recession, or a very inflationary stagflation. You read it here.

[ananda]

14. Caving to the bully when they shouldn't.

This sure is getting old.

[Astraea]

15. so the new role of the fed

is to serve the whims of the pResident.

Fuck.

[safeinOhio]

16. Give the rich man easy money, and...

Some people say a man is made outta mud
A poor man's made outta muscle and blood
Muscle and blood and skin and bones
A mind that's weak and a back that's strong

You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter, don't you call me 'cause I can't go
I owe my soul to the company store

[SunSeeker]

17. Thus admitting the economy is slowing. nt

[OilemFirchen]

18. Worse.

They have to be anticipating a deep recession soon. Lower rates during a period of full employment? When businesses are cash rich?

Not. Fooling. Anyone.