With the cruising economy growing by 2.5% in the first half of the year and probably above 2% in the second part of the year, many analysts and two voting board members cannot find reason for the decision to cut interest rates by a further 0.25%, now announced by the FED. According to the members’ analysis the only less positive point is in investment and exports, derived from the theme of trade war, but as Powell said private consumption is robust, supported by a solid labour market and which has ensured economic growth.
Regarding the outlook the market anticipates another cut for this year, however and as indicated at the press conference by the president of the FED, the actions of the leading institution are closely linked to the outgoing data and there is no set course, the idea being to withstand economic expansion. Despite everything and not surprisingly, Trump was quick to criticize that Powell and the FED lacked vision and courage, something that the market already gives little importance to. For now, the indices have reacted lower, but it will be tomorrow that we can more reliably assess the impact of Powell’s decision and statements on investor sentiment.
Photo by Jon Tyson.
