Wednesday, October 30, 2019

QUARTER POINT RATE CUT BY THE FED THREATEN PONZI CURRENCIES AND BONDS IN OVER 200-COUNTRIES.










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Yahoo Finance's Brian Cheung, Brian Sozzi and Alexis Christoforous discuss why the Federal Reserve is likely to cut rates.
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Sep.18 -- Federal Reserve Chairman Jerome Powell speaks at a news conference in Washington about the decision by the Fed's ...


The Federal Reserve has cut interest rates for the second time in three months in a bid to keep the U.S. economy growing. What ...
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The cost of borrowing is coming down. For the first time since the 2008 financial crisis, the Federal Reserve cut interest rates.


If the U.S. economy appears to be in trouble, the Fed might cut interest rates to drive economic growth. When the Federal Reserve ...
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CNBC's Steve Liesman examines the possibility of an important change coming to Federal Reserve policy.
The Federal Reserve cut interest rates for the third consecutive time on Wednesday, but did not offer clues as to whether or not it will cut rates fu

rther.
The

Federal Open Market Committee on Oct. 30 voted to reduce the benchmark interest rate by 25 basis points to a target range of between 1.5% to 1.75%. The FOMC statement justified the need for another cut by pointing to business fixed investment and exports that appear to “remain weak.”
The statement also notably removed language promising to “act as appropriate to sustain the expansion,” a phrase commonly used by Fed officials after it pivoted from the steady rate hikes of 2018 to the rate cuts in July and September.
The Fed now says it will “continue to monitor implications of incoming information for the economic outlook” in considering future moves.
Two FOMC voters, Kansas City Fed President Esther George and Boston Fed President Eric Rosengren, dissented from the decision. Both dissented against the July and September decisions to cut rates as well.



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DENVER, CO - OCTOBER 8: Fed Chairman Jerome Powell is giving a luncheon keynote at the National Association of Business Economists in Embassy Suites by Hilton Denver Downtown Convention Center. October 08, 2019. (Photo by Hyoung Chang/MediaNews Group/The Denver Post via Getty Images)

Downside risks

The statement was otherwise mostly unchanged from September. The Fed continued to describe the labor market as “strong,” as the September jobs report saw the unemployment rate fall to 3.5%.
On inflation, the Bureau of Economic Analysis reported core personal consumption expenditures (the Fed’s preferred measure) of 1.8% in August. But the Fed statement noted that inflation continues to run “below 2%.”
Hours before today announcement, the BEA also released its first print on third-quarter GDP, showing an annualized 1.9% pace of growth, above expectations of 1.6%. Consumption appeared to moderate, but heavy government spending helped boost U.S. growth.
The GDP figures also revealed a 15.3% decline in structures spending in the third quarter, just one example of the declining business fixed investment.



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Federal Reserve Chairman Jerome Powell (R) speaks with New York Fed President John Williams and Kansas City Fed President Esther George (L) at the Kansas City Fed’s annual Economic Symposium in Jackson Hole, Wyoming, U.S. August 24, 2018. REUTERS/Ann Saphir

But Fed policymakers have said in recent months that the rate cuts are mostly in reaction to what Fed Chairman Jerome Powell has described as “downside risks, such as trade concerns and geopolitical tension. Those risks, policymakers say, may not be seen in the data yet

.
Since the

Fed’s last meeting in September, developments on those downside risks have been mixed.
The trade war between the U.S. and China could be on its first steps to resolution as both sides work through “phase one” trade deal, although the specific details of the agreement are still being hashed out.
Geopolitical tensions, meanwhile, do not appear to be letting up. Brexit was postponed yet again, protests continue in Hong Kong, and China’s economy appears to be slowing. Two weeks ago, the International Monetary Fund lowered its expectations for global growth in 2019 to the slowest pace since the financial crisis, at 3%.

Not QE

In his press conference, Powell will be closely watched for any commentary on the Fed’s mid-October announcement that it would resume growth of its balance sheet by buying about $60 billion of Treasury bills each month. The purchases are designed to increase the amount of bank reserves in the financial system, since a scarcity of available bank reserves for overnight lending led to a dramatic spike in interest rates in September.
The Fed says the purchases will continue at least into the second quarter of 2020.

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