Fed Cuts Rate by 25bps, Worrying Investors by Failing to Signal Further Rate Cut

Fed Cuts Rate by 25bps, Worrying Investors by Failing to Signal Further Rate Cut.

Over the night, the U.S. Federal announced that the U.S. Central Bank had cut the interest rate by 25 basis points to a range of 1.75% to 2%.

However, Wallstreet faced a plummet both before and after the statement. The falling prior to the statement was evident, but the plunge after Fed Chairman Jerome Powell made the statement was due to the fact that Fed failed to give the signal for a further rate cut as investors had hoped.

Dow Jones once fell 211 points, but able to close higher by 0.13%, same as S&P 500 that fell 28 points after the announcement while being able to close flat. Nasdaq sank 100 points after the speech, and finished down 0.11%.

What concerns the market was that the Fed had divided votes for a further cut. Three officials dissent the cut, five members wanted to maintain the rate while five members supported the cut to the current range and keeping the rate there while seven others wanted at least one more cut before year-end.

The U.S. President Donald Trump tweeted on Wednesday, calling Powell and the Fed “no guts, no sense, no vision” while asserted that the Fed had failed and not gone far enough.

Powell defended the Fed’s decision by saying that the Fed will change rates if necessary, but not before. “We don’t see recession; we are not forecasting a recession,” said Powell.

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