Summary for the 19th of September -A divided Federal Reserve


As expected, the Federal Reserve has lowered the federal funds interest rate by 25 basis points to a range of 1.75% to 2%. The opinions of the FOMC members are divided, similar to the July meeting, three members have voted no to the decision of lower the interest rate, Esther George of Kansas City and Eric Rosengren of Boston both prefer to keep the interest rate unchanged, while James Bullard of St. Louis wants a 50 basis points cut. Seven of the members are expecting at least one more cut this year of 25 basis points,  five members are expecting a hike of 25 basis points by the end of this year while the last five members are expecting unchanged interest rate.

At the press conference, Jerome Powell states several times that the future path of the target range for the federal funds rate will depend on incoming information for the economic outlook, and that the FOMC is not on a preset course, he also says that its difficult to have a hardened expectations about where the rate policy is going to be a year from now.  Fed’s economic projection shows little changes in the data from June. It shows a strong outlook in economic growth, and inflation rising to the target range.

Indices for 19th of September)
Dow: +0.1 % (18th of September)
S&P 500: Unchanged (18th of September)
Nasdaq: -0.1% (18th of September)
Nikkei: +0.5%  (19th of September)
Chinese indices: -1.2% (19th of September)
STOXX Europe 600 Index: +0.61% (19th of September)

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