Powell explains Fed’s rate cut decision

Federal Reserve Chairman Jerome Powell explains the decision to reduce the Federal Funds Target Range (FFTR) by 25 basis points to 4.50%-4.75% following the November meeting and answers questions during the subsequent press conference.

The US Dollar remains largely on the defensive following the Fed’s decision to lower its rates by 25 bps, as was largely anticipated. The US Dollar Index (DXY) revisits the 104.50 region, fading part of the post-Trump strong climb to the boundaries of the 105.00 barrier in the previous day.

Key Quotes

Fed took another step in reducing policy restraint.

The labour market remains solid.

Inflation has eased substantially.

I continue to be confident that with recalibration of stance, inflation moves sustainably down to 2%.

Unemployment rate has edged down in past 3 months, remains low.

In near term election will have no effect on policy decision.

Economy is hard to forecast beyond near term.

I don’s know timing, substance of policy changes.

Will see where bond rates settle, too early to say where.

Appears that moves in bond rates are not mostly about higher inflation expectations.

Bond rates are reflectinbg growth expectations.