President Donald Trump on Wednesday blasted the Federal Reserve’s interest rate decision, accusing the central bank and Fed Chair Jerome Powell of having “no guts” for not meting out a more aggressive cut.
The Federal Reserve on Wednesday cut interest rates again by 25 basis points to a new target range of 1.75% to 2%, and telegraphed a strong likelihood of one more rate cut by the end of the year.
However, some on Wall Street anticipated a more aggressive easing of 50 basis points, particularly with financial markets conditions tightening. Indeed, markets sank to their lows of the day as investors digested the Fed’s latest monetary policy decision, and what divided officials meant for the prospect of more monetary stimulus.
Trump tweeted that the central bank lacked “vision” as well as clear communication — continuing his war of words against the Fed and the man he hand-picked to lead the institution.
The central bank’s decision — and its ‘dot plot’ of future rate expectations — indicated a clearly dovish bias. However, the market’s reaction suggested disappointment that a deeper easing campaign could pull rates even lower.
“Bottom line, there is now a likelihood that as of today, this might be the last rate cut of the year as the ‘mid course adjustment’ process continues but could be done,” noted Peter Boockvar, chief investment officer at Bleakley Advisory Group.
“So call this a hawkish cut. The stock market is of course disappointed with the limit on the amount of candy they’ll get, but more rate cuts assumes an ever slowing economy and that’s not something to cheer for,” he added.
The president’s response comes a week after he issued a call for the Fed to engineer rates to zero “or less,” and backed negative yields as part of a strategy to cut U.S. borrowing costs and stimulate growth.
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