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| US Federal Reserve cuts interest rates, sending S&P 500 to record high - as it happened | |
| (32 minutes later) | |
| And finally, here’s our economics editor Larry Elliott on today’s Fed rate cut: | And finally, here’s our economics editor Larry Elliott on today’s Fed rate cut: |
| The US central bank has cut interest rates for the third time this year in an attempt to keep the longest running period of growth in the country’s history continuing into the crucial election year of 2020. | The US central bank has cut interest rates for the third time this year in an attempt to keep the longest running period of growth in the country’s history continuing into the crucial election year of 2020. |
| But the Federal Reserve put itself on a potential collision course with Donald Trump when it signalled to the financial markets that it had no immediate intention of cutting the cost of borrowing further. | But the Federal Reserve put itself on a potential collision course with Donald Trump when it signalled to the financial markets that it had no immediate intention of cutting the cost of borrowing further. |
| The president has put intense pressure on the Fed to boost the world’s biggest economy and his own re-election prospects by making aggressive cuts in the cost of borrowing. | The president has put intense pressure on the Fed to boost the world’s biggest economy and his own re-election prospects by making aggressive cuts in the cost of borrowing. |
| But the central bank’s chair, Jerome Powell, said there was a limit to what the Fed could do and that a more effective way to stimulate activity would be for Congress to loosen fiscal policy through spending increases or tax cuts. | But the central bank’s chair, Jerome Powell, said there was a limit to what the Fed could do and that a more effective way to stimulate activity would be for Congress to loosen fiscal policy through spending increases or tax cuts. |
| Here’s the full story: | Here’s the full story: |
| Federal Reserve cuts US interest rates for third time this year | Federal Reserve cuts US interest rates for third time this year |
| Goodnight! GW | Goodnight! GW |
| Ding ding! Wall Street has closed at a new all-time high, as traders welcome today’s cut to US interest rates. | Ding ding! Wall Street has closed at a new all-time high, as traders welcome today’s cut to US interest rates. |
| The benchmark S&P 500 index scaled new peaks -- up 10 points, or 0.3% to 2,046, a new record closing high. | The benchmark S&P 500 index scaled new peaks -- up 10 points, or 0.3% to 2,046, a new record closing high. |
| The Dow Jones industrial average moved closer to its own record high too; gaining 116 points, or 0.4%, to 27,188. | The Dow Jones industrial average moved closer to its own record high too; gaining 116 points, or 0.4%, to 27,188. |
| US Closing Prices:#DOW 27186.69 +0.43%#SPX 3046.77 +0.33%#NDX 8083.11 +0.44%#RTY 1572.85 -0.27%#VIX 12.3 -6.82% | |
| But we’ll only know in the future if the Fed made the right call today. | But we’ll only know in the future if the Fed made the right call today. |
| Edward Moya of trading firm OANDA says Powell may have blundered by saying rates are now in a ‘good place’, rather than leaving space for further cuts. | |
| The Fed pretty much signaled they are in pause mode and will wait to see if we continue to see positive developments with the US-China trade war. The outlook on the economy was upbeat and this was unnecessary as they have given many hawkish hints that they could be closer to bending back toward rate increases. Inflation is anchored, albeit somewhat firmer recently, but nowhere near running the risk of running hot. | The Fed pretty much signaled they are in pause mode and will wait to see if we continue to see positive developments with the US-China trade war. The outlook on the economy was upbeat and this was unnecessary as they have given many hawkish hints that they could be closer to bending back toward rate increases. Inflation is anchored, albeit somewhat firmer recently, but nowhere near running the risk of running hot. |
| Powell delivered a hawkish cut that has pretty much locked the Fed into keeping the rates on hold in December and possibly into the spring, despite huge geopolitical risks from the trade war and Brexit. A lot could go wrong in a moments notice and this may go down as huge policy mistake. | Powell delivered a hawkish cut that has pretty much locked the Fed into keeping the rates on hold in December and possibly into the spring, despite huge geopolitical risks from the trade war and Brexit. A lot could go wrong in a moments notice and this may go down as huge policy mistake. |
| In summary: Jerome Powell’s message is that US interest rates may not be cut again soon, if the economy holds up.... and he certainly doesn’t expect to reverse today’s cut soon either. | In summary: Jerome Powell’s message is that US interest rates may not be cut again soon, if the economy holds up.... and he certainly doesn’t expect to reverse today’s cut soon either. |
| Fed Chair Jay Powell is a little bit hawkish in saying that the current funds rate is likely to remain appropriate. But he's massively dovish in saying that you'd need a "significant move up" inflation before the fed would consider raising rates. | Fed Chair Jay Powell is a little bit hawkish in saying that the current funds rate is likely to remain appropriate. But he's massively dovish in saying that you'd need a "significant move up" inflation before the fed would consider raising rates. |
| Q: What do you make of Donald Trump’s claim today that America has its greatest economy ever? | Q: What do you make of Donald Trump’s claim today that America has its greatest economy ever? |
| Powell lets this question whizz past his helmet, as he never responds to comments from elected officials. | Powell lets this question whizz past his helmet, as he never responds to comments from elected officials. |
| Here’s that tweet - maybe Trump will tweet about the Fed soon?.... | Here’s that tweet - maybe Trump will tweet about the Fed soon?.... |
| The Greatest Economy in American History! | The Greatest Economy in American History! |
| That’s the end of the press conference. | That’s the end of the press conference. |
| Q: Does America risk a ‘Japanification’, if low interest rate expectations become entrenched? | Q: Does America risk a ‘Japanification’, if low interest rate expectations become entrenched? |
| There are powerful disinflationary pressures in the world economy, and the US isn’t exempt, Powell replies. | There are powerful disinflationary pressures in the world economy, and the US isn’t exempt, Powell replies. |
| The Fed takes this risk “very seriously”, so will use policy to keep inflation close to 2%, he adds. | The Fed takes this risk “very seriously”, so will use policy to keep inflation close to 2%, he adds. |
| Q: Do you share the IMF’s concerns that rising corporate debt levels could threaten financial stability? | Q: Do you share the IMF’s concerns that rising corporate debt levels could threaten financial stability? |
| Leverage among corporations is historically high. We’re watching carefully and taking appropriate action, Jerome Powell replies. | Leverage among corporations is historically high. We’re watching carefully and taking appropriate action, Jerome Powell replies. |
| Powell declines to swing at a curveball question on whether unions can play a stronger role tackling inequality (in the light of the strike at General Motors). | Powell declines to swing at a curveball question on whether unions can play a stronger role tackling inequality (in the light of the strike at General Motors). |
| Wall Street has got the message.... | Wall Street has got the message.... |
| Markets trimmed their expectations for interest rates to fall further this year after the Fed announced a 25bps cut and hinted that monetary policy may now be on hold, for one meeting at least. Next rate cut is expected in March or April at the earliest. pic.twitter.com/rQHTVN2yQp | Markets trimmed their expectations for interest rates to fall further this year after the Fed announced a 25bps cut and hinted that monetary policy may now be on hold, for one meeting at least. Next rate cut is expected in March or April at the earliest. pic.twitter.com/rQHTVN2yQp |
| Q: How does the Fed balance the divide between regions in the US, such as the rural-urban divide? | Q: How does the Fed balance the divide between regions in the US, such as the rural-urban divide? |
| Monetary policy is a blunt tool, Powell freely admits. It can’t set different interest rates across the country. | Monetary policy is a blunt tool, Powell freely admits. It can’t set different interest rates across the country. |
| Congress have responsibility for tackling long-term. challenges, such as income inequality, and differences in labor force participation rates. | Congress have responsibility for tackling long-term. challenges, such as income inequality, and differences in labor force participation rates. |
| Powell basically tells Congress to get its act together:"If you really want the US economy to be all it can be...you need proper monetary policy, but really it’s fiscal policy that supports inclusive growth."#economy #Fed | Powell basically tells Congress to get its act together:"If you really want the US economy to be all it can be...you need proper monetary policy, but really it’s fiscal policy that supports inclusive growth."#economy #Fed |
| Stocks are moving higher on Wall Street, after Powell dampened the idea of a rate rise in 2020: | Stocks are moving higher on Wall Street, after Powell dampened the idea of a rate rise in 2020: |
| Stocks extend gains as Powell says the Fed would need to see a ‘really significant’ rise in inflation before hiking rateshttps://t.co/G2uTDlSifZ pic.twitter.com/WSYpVNS2P2 | Stocks extend gains as Powell says the Fed would need to see a ‘really significant’ rise in inflation before hiking rateshttps://t.co/G2uTDlSifZ pic.twitter.com/WSYpVNS2P2 |