Global| Sep 18 2019FOMC Cuts Interest Rates as Growth & Trade War Concerns Rise
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve lowered the target for the Fed Funds rate by 25 basis points to a range of 1.75% to 2.00% at today's FOMC meeting. The action was expected in the Action Economics Forecast Survey, which does not foresee further [...]
The Federal Reserve lowered the target for the Fed Funds rate by 25 basis points to a range of 1.75% to 2.00% at today's FOMC meeting. The action was expected in the Action Economics Forecast Survey, which does not foresee further action this year.
Fed officials indicated three areas of uncertainty about the outlook including the developing growth slowdown abroad, U.S. trade policy and low inflation. These concerns were also expressed at the June meeting when rates also were lowered.
The statement which accompanied today's action was similar to the one issued at the last meeting. It cited the strong pace of household spending and weaker business investment & exports.
The Fed released economic projections which were little revised from those issued in June. Real GDP growth of 2.2% this year, then 2.0% in 2020, 1.9% in 2021 and 1.8% in 2022 was changed from 2.1%, 2.0% and 1.8%. Core PCE inflation of 1.8% in 2019 is expected to be followed by 1.9% in 2020, then 2.0% in both 2021 and 2022. The unemployment rate is projected to average 3.7% this year and next, then rise to 3.8% in 2021 and 3.9% in 2022. These figures were revised from 3.6%, 3.7% and 3.8%, respectively. The projections for 2022 were newly released.
The press release for today's action can be found here.
Seven of the ten members of the FOMC voted to lower the funds rate at this time.
| Current | Last | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate Target | 1.75%-2.00% | 2.00%-2.25% | 1.82% | 1.00% | 0.40% | 0.13 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
