Following the Fed's 50 basis point rate cut and the subsequent press conference by Fed Chair Jerome Powell, economists and analysts had mixed reactions to the move.
Economists' and Analysts' Reactions
Brad Bechtel, Jefferies’ global head of foreign exchange, said the Fed’s decision came as a surprise to much of the market. 'Expectations were split about 50/50 ahead of the decision,' Bechtel said. 'The Fed is trying to head off a recession, but the market response has been lukewarm so far. Much of that reaction was already priced in.'
Fed Chair's Comments
Powell's comments at the press conference reinforced the perception that he personally favors a larger rate cut. 'We've made a good, strong start on rate cuts. I'm very happy that we've done that,' Powell said, a statement that was interpreted by some analysts as confirmation that Powell was pushing for a 50 basis point cut in hopes of gaining broader committee support.
Political Reactions
US Senator Elizabeth Warren, who has often criticized Powell's approach to monetary policy, voiced her displeasure. 'Powell was too late to lower interest rates,' Warren said. 'While this rate cut provides some relief, more reductions are needed to support consumers and homeowners.'
The Fed's decision to cut the rate by 50 basis points elicited varied reactions among economists and analysts. Further rate changes are anticipated after additional economic data analysis and political discussions.
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