Powell Calls Rate Cut a "Mid-Cycle" Adjustment

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According to Fed Chair Jerome Powell, this may not be the beginning of a rate cut cycle.

Powell's post-announcement speech was far more hawkish than most expected.

The Fed Chairman says Rate Move was a ‘Midcycle Adjustment,’ Hinting More Cuts Not a Guarantee.

Cutting rates as way to brace against “downside risks,” to support the economy and to boost inflation, Powell said during a press conference after the vote.

“We’re thinking of it essentially as a mid-cycle adjustment to policy,” he said He added that Fed officials “think it will serve all of those goals” that he mentioned.

Looking at the history of the Fed, Powell cautioned against assuming that this week’s cut is the beginning of the cycles that happened in the past.

“That refers back to other times when the FOMC has cut rates in the middle of a cycle and I’m contrasting it there with the beginning of a lengthy cutting cycle,” he said. “That is not what we’re seeing now, that’s not our perspective now.”

The chairman said there was “definitely an insurance aspect” to the cut.

“What you’ve seen over the course of the year as we’ve moved to a more accommodative policy, the economy has performed about as expected with the gradually increasing support,” Powell said. “Increasing policy support has kept the economy on track and kept the outlook favorable.”

Sure to Howl

Trump is sure to howl.

The market already has.

Deer in Headlights

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Powell Attempts to Walk Back Comment

I am waiting for the end of day or later this evening to do a yield curve before and after.

Mike "Mish" Shedlock

Comments (4)
No. 1-4
Tony Bennett
Tony Bennett

With apologies to Don Ho ... there ain't no such thing as tiny bubbles...

Flatlaxity
Flatlaxity

Powell's refrain: "...You made me love you (I didn't want to do it...I didn't want to do it)"

themonosynaptic
themonosynaptic

Powell hasn't learned how to use a lot of important words to say nothing yet.

Six000mileyear
Six000mileyear

Powell blew an opportunity disengage the FED from the markets. An historically low yield on the junk bonds indicates the market's willingness to lend. No central bank stimulus is needed. Powell should have increased interest rates on what the FED charges borrowers and decrease the rate in pays depositors.