Federal Reserve Likely to Cut Interest Rates Today

Federal Reserve

The Federal Reserve will conclude its latest policy meeting later today, and there’s likely to be some good news for investors. The consensus amongst financial insiders and analysts is that the central bank will cut its federal funds rate by a quarter of a percentage point.

While this might be less than what some investors and even President Trump want to see, it could be the perfect amount to continue supporting what is now the longest economic expansion in American history.

Federal Reserve Message Will Go Against the President’s

President Trump recently called for interest rates to be slashed to zero or even put into negative figures. This would allow the government to refinance and recalibrate in a slowing global economy. It would also come with the risk of wildly increased interest rates later, and investors and savers would ultimately lose out.

While a zero or negative interest rate is not a realistic outcome of any Fed meeting in the foreseeable future, Trump has still pushed for rates to be slashed. He has also been very public in his disdain for current Fed policy.

In a tweet this week, Trump said that “The United States, because of the Federal Reserve, is paying a MUCH higher interest rate than other competing countries. They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil Hit. Big Interest Rate Drop, Stimulus!”

The President clearly wants the Fed to lower the interest rate significantly to take pressure off the economy. The Fed acts independently from the executive branch and will likely come out with a very different message later today.

Eric Rosengren, the President of the Federal Reserve Bank of Boston, said to the Washington Post this week that the Fed should not apply “accommodation at a time when you don’t need it, in part because you won’t have it when you do need it, and in part because there are side effects from pushing interest rates very low.”

Rosengren’s comments reflect the sentiment of most of the current Federal Reserve Board of Governors. A quarter point rate cut is the most likely outcome of the meeting today, and even though it won’t please the President, it will likely be enough to sustain an economy and stock market that are facing moderate long-term headwinds.

 

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The reports, research and newsletter are based on current and historical market data, as well as publicly available financial data.They are intended to be a starting point for investors. They do not provide every material fact about a company or industry, nor are they recommendations to buy or sell. The writers and the company make no warranties or representations as to the accuracy of these reports.   You should NOT rely solely upon the information or opinions read in the content. Rather, you should use the content as a starting point for doing independent research on the independent analysis and trading methods in the content. The content is impersonal and does not provide individualized advice or recommendations for any specific reader or individual portfolio. By accessing this website you have agreed to our disclaimers and privacy policy.

 

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