On Wednesday, October 30, the Federal Reserve cut interest rates for the third time this year in hopes of preventing a recession against the backdrop of a potential global trade war.
The policy statements accompanying previous rate cuts left room for potential future easing by stating that the Fed will continue to “act as appropriate.” However, during this announcement, the Federal Reserve indicated that its rate-cut cycle may come to a pause, stating that it will “monitor the implications of incoming information for the economic outlook as it assesses the appropriate path” of the federal funds rate target range.
After the Federal Reserve lowered the federal funds rate by a quarter of a percentage point to a target range of between 1.50% and 1.75%, U.S. stocks immediately reacted with slight losses, but then steadied.
In order to gain more insights on the Federal Reserve’s latest announcement and the market’s reaction, Reuters recently spoke with Delegate Advisors Director of Investment Research Jim Powers.
“It’s pretty much what was expected. The more important outcome is [the Fed] removed the phrase ‘act as appropriate.’ It looks like the market is taking that to mean that there will be a pause in the declining rate path they were on beforehand. That’s what was expected, and that’s generally a good thing. The economy is pretty good and we’re not in favor of lowering rates in a good environment,” says Powers.