Mexican Media Brands
Fed Lowers Interest Rate by One-Quarter Point
The Federal Reserve lowered its benchmark lending rate by 0.25 point yesterday, marking the central bank’s first decrease since 2008.
#economics
Share
The Federal Reserve lowered its benchmark lending rate by 0.25 point yesterday, marking the central bank’s first decrease since 2008.
The move displeased President Donald Trump, who has been pressuring Fed Chairman Jay Powell for weeks for a larger reduction that would help keep the U.S. economy humming. Last week the U.S. Dept. of Commerce estimated that U.S. economic growth slowed to 2.1% in the second quarter from 3.1% in January-March and 3.5% in the same period in 2018.
Powell says the American economy grew at a “healthy pace” through the first half of 2019, with very low unemployment and strong household spending. But he also notes that manufacturing output has been shrinking, inflation is below the Fed’s 2% target and business fixed investment has been soft.
Wednesday’s 8-to-2 vote lowered the lending rate to a range of 2.0%-2.25%. Analysts widely interpret the action as an exploratory move that likely will be followed soon by at least one more quarter-point cut.
Powell, noting that Wednesday’s action was “well telegraphed,” told reporters that he is not committed to just one reduction. But he also says the move is a “midcycle adjustment” to Fed policy and does not indicate “the beginning of a long series of rate cuts.”
Powell insists the central bank’s actions are not being influenced by political concerns.
RELATED CONTENT
-
On Headlights, Tesla's Autopilot, VW's Electric Activities and More
Seeing better when driving at night, understanding the limits of “Autopilot,” Volkswagen’s electric activities, and more.
-
China and U.S. OEMs
When Ford announced its 3rd quarter earning on October 24, the official announcement said, in part, “Company revenue was up 3 percent year over year, with net income and company adjusted EBIT both down year over year, primarily driven by continued challenges in China.” The previous day, perhaps as a preemptive move to answer the question “If things are going poorly in China, what are you doing about it?, Ford announced that it was establishing Ford China as a stand-alone business unit.
-
Tariffs on Autos: “No One Wins”
While talk of tariffs may make the president sound tough and which gives the talking heads on cable something to talk about, the impact of the potential 25 percent tariffs on vehicles imported to the U.S. could have some fairly significant consequences.