A few snippets from analyst responses to the Fed rate cut Wednesday:
BNZ, in brief, a handy summary if you need:
- market has taken the statement as hawkish relative to expectations
- Fed cut the Fed Funds target range by 25bps to 1.75-2.0%
- and it cut the interest rate on excess reserves by 30bps to 1.7% to help keep the effective Fed Funds rate within that range
- dissents were in both directions
- George and Rosengren arguing for no cut (again)
- Bullard argued for a 50bps cut
- median "dot" is consistent with no further reduction rates this year or next
- minimal changes to the Fed's economic projections
- policy outlook statement was unchanged from July
- The only changes made to the statement were the acknowledgement that household spending had been rising at a strong pace while business investment and exports had weakened
- press conference, Chair Powell... When asked whether the FOMC still had an easing bias, Powell said "we don't" and argued that policy will be data dependent.
Nordea:
- very few changes to their forecast for the US economy
- Powell's main message from the press conference. … incoming data and the evolving risk picture will determine the need for any further adjustments to rates
- We didn't learn much from todays press release or press conference
- The evolvement of the US economy and risk picture will determine how many more cuts will potentially follow
Scotia:
- The overall suite of Fed communications delivered a hawkish rate cut and pushed back upon aggressive market pricing for further easing.
- Fed cuts 25bps with overall communications as we expected
- guides that it may be done cutting before hiking in 2021
- Even the most dovish FOMC members see only one more cut