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Fed chief delivers rate cut and mixed signals

Video Credit: Reuters - Politics
Published on September 18, 2019 - Duration: 02:06s

Fed chief delivers rate cut and mixed signals

Federal Reserve Chairman Jerome Powell announced a second rate cut in more than a decade but failed to provide a clear signal on how many more rate cuts are coming, if any.

Conway G.

Gittens reports.

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Fed chief delivers rate cut and mixed signals

As if Federal Reserve Chairman Jerome Powell didn't have enough weighing on his shoulders with a near daily Twitter rant against him from the White House, a trade war, and a global economic slowdown, now there's an overnight funding crunch to add to the list.

SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "It's a challenging time, I admit it." The Fed on Wednesday lowered its key lending rate by a quarter percentage point to a range of 1.75 to 2.00 percent as expected SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "Weakness in global growth and trade policy uncertainty have weighed on the economy and pose ongoing risks.

These factors in conjunction with muted inflation pressures have led us to shift our views of appropriate monetary policy over time toward a lower path for the Federal Funds rate and this shift has supported the outlook." But ever since cutting rates in July for the first time in more than a decade, Powell has had to walk a fine line between defending the rate cuts as an insurance policy, while avoiding to talk down the longest period of economic growth the U.S. has ever seen - thanks to a healthy job market and upbeat consumer spending.

That's led to confusion about what comes next.

Only a small majority of policymakers expect at least one more rate cut this year.

And Powell wouldn't even commit to that.

SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "If the economy does turn down then a more extensive sequence of rate cuts could be appropriate.

We don't see that.

It is not what we expect but we would certainly follow that path if it became appropriate.....sometimes the path ahead is clear and sometimes less so.

We're going to be looking carefully meeting by meeting.

That did not go down well with President Trump who tweeted Wednesday: "Jay Powell and the Federal Reserve Fail Again.

No "guts," no sense, no vision!

A terrible communicator!" Trump has repeatedly urged the Fed to slash rates to zero or even go to negative rates.

But Wall Street saw things differently.

With Powell not totally ruling out any more rate cuts - most of the stock market did an about-face to end slightly higher.

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