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Rate cut was & # 39; recalibration & # 39; not part of & # 39; preset course & # 39;

Federal Reserve officials who voted to lower interest rates three weeks ago agreed that the move should not be viewed as an indication that it is a "pre-set rate" for future cuts, according to meeting minutes released Wednesday. [19659002Sammendragetindikerteatbeslutningstakeresåpåfartensomen”midt-syklusjustering”etuttrykkstyrelederJeromePowellbruktepåennyhetskonferanseietterkantsomblesettpåsomenbidragsytertilsalgavaksjemarkedetettermøte30-31juli[19659002] The markets have priced in a number of interest rate cuts, so Powell's use of the term spread worries that the Fed might not be as accommodating with policy as expected.

Finally, the Federal Open Market Committee, which sets monetary policy, voted to lower the central bank's reference rate by 25 basis points to a target range of 2 to 2.5%. It was the first rate cut in 1[ads1]1 years, dating to the financial crisis.

However, the members did not commit to future cuts.


"In their discussion of the outlook for monetary policy beyond this meeting, participants generally favored an approach where policy would be guided by incoming information and its implications for the economic outlook, and which avoided any appearance of following a preset course, "referenced the protocol.

The document went on to say that "most participants" saw the quarter-point impact "as part of a recalibration of policy attitude, or mid-cycle adjustment" in response to changing conditions.

"Several participants suggested that the nature of many of the risks they considered to weigh on the economy, and the lack of clarity on when these risks could be addressed, highlighted the need for policy makers to remain flexible and focused on the implications of data received for the outlook," states that in the minutes.

President of the US Central Bank Jerome Powell speaks during a press conference following a meeting of the Federal Open Market Committee in Washington, DC July 31, 2019.

Andrew Caballero-Reynolds | AFP | Getty Images

The reveal comes amid President Donald Trump's repeated announcement for more aggressive cuts. He posted several tweets Wednesday as hectoring Powell and the central bank for their pace in facilitating.

Those who advocated for the interest rate cut cited three main factors: slowing economic activity, especially reductions in business investment and industry; "risk management" in a time of slow economic activity and trade tensions; and soft inflation, with readings sustained low Fed's 2% target.

The protocol noted that "a couple" members wanted a 50 basis point cut, based primarily on the weak inflation reading. At the same time, "several" did not seek any movement, considering that the risk had been "reduced" since the June meeting.

Finally, although the members agreed that the economy had shown some improvement in the days leading up to the meeting, they agreed to the cut.

The Protocol stated that those who voted for the cut believed it would "better position the overall stance of the policy to counter the effects on the prospects of weak global growth and uncertainty in trade policy, insure against any further disadvantages of risk from these sources, and promote a faster return on inflation to the Committee's symmetrical target of 2 percent than would otherwise be the case. "

These officials saw the move" as part of an ongoing reassessment "of the policy that began in 2018, a year in which the Fed raised rates four times.

There were two no votes at the meeting, from Fed Presidents Eric Rosengren of Boston and Esther George of Kansas City.

There was also some discussion at the meeting about the Committee's decision to end its reduction in the balance sheet two months earlier.

The Fed had allowed a curtailed income level from the bond portfolio each month, resulting in a reduction of more than $ 600 billion in the balance sheet. Members voted to quit the program from August 1 instead of the end of September. Some members were concerned that the end could challenge the Fed's expressed view that the most important tool for policy was the fund price, while others said that continuing the reduction would have been contrary to the cut.

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