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Fed cuts rates again, predicts stronger economic growth
As anticipated, the Federal Open Market Committee (FOMC) ended its two-day monetary-policy setting meeting with a 25 basis point rate cut – the second of the year. NAFCU Chief Economist and Vice President of Research Curt Long said given the split opinions on the committee, NAFCU doesn't expect any more rate changes this year.
"Today's widely-expected rate cut has everyone looking to the fourth quarter," Long said. "The committee was nearly evenly divided among those expecting a hike, a cut, or no changes to rates between now and the end of the year. This three-way splintering was also evident in today’s vote, with two dissents from voters who wanted no action, and another dissent from a member who preferred a 50 basis-point cut.
"NAFCU's expectation is that the recent run of healthy economic data will continue, resulting in no further rate moves this year," Long added.
In its decision, the committee cited "implications of global developments for the economic outlook as well as muted inflation pressures" as the reasoning behind its rate cut. It also noted solid job growth, low unemployment, and rising household spending; however, business investments and exports have weakened.
The committee also released updated projections that revealed the members have more optimistic expectations for growth, with its GDP projection rising from 2.1 percent in June to 2.2 percent. The inflation projections remained unchanged; current inflation remains near its symmetric 2 percent objective.
More on the meeting's outcomes can be found in NAFCU's FOMC Macro Data Flash report.
The FOMC will next meet Oct. 29-30; its tentative meeting schedule for 2020 is now available.