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FED likely to hold future rate drops

At the policy meeting on Wednesday, officials said they would lower the federal-funds target rate by a quarter percentage point, to between 1.5% and 1.75%.

In taking this action, the Fed cited “the implications of global developments for the economic outlook as well as muted inflation pressures.” In essence, these rate cuts are insurance against a recession.

Fed Reserve releases a few short statements today that most likely mean no more rate drops.


Fed Chairman Jerome Powell said monetary policy 'is in a good place.’

Quick Thoughts on The Fed's Major Verbiage Change (and Lack Thereof)Update Issued: 10/30/2019 2:23 PM


OLD:

As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

NEW: 

The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.


According to MSB live

"So basically, the old one says the committee is contemplating/assessing the rate path while it monitors economic implications, and it WILL ACT as appropriate...

And the new one says the committee will monitor the economic implications as it contemplates/assesses the rate path.  No extra mention of strong labor market and near-objective inflation, and notably, no inclusion of "WILL ACT" nor any allusion to future action.

In other words: the Fed just told us they're done cutting rates indefinitely.  Although their verbiage continues to imply they would cut or hike depending on economic developments, in my opinion, this statement conveys much less intention to continue cutting rates than the last one simply due to the removal of "will act."

As far as notable INCLUSIONS are concerned, it's bond bullish that the Fed decided to keep the following phrase unchanged:

but uncertainties about this outlook remain

Granted, that's not saying much, but it's also not saying "smooth sailing!""


other comments around the web

MSN MARKET WATCH " Economists think the Fed will now refrain from cutting rates again at its next policy meeting in mid-December, but many see the central bank easing in 2020 because they expect the economy to slow down."