It wasn’t just a tapering of the taper, but now it is in full expansion mode.
Speaking to the National Association of Business Economists, Federal Reserve Chair Jerome Powell candidly said that he is open to additional interest rate cuts because of the global economic slowdown. This was expected, despite his previous words of caution and clever language of “mid-cycle adjustment.”
What was more interesting about his remarks was that he revealed the Fed will begin to add to its balance sheet, which is in the $3.7 trillion ballpark.
This past summer, the central bank said that it would stop the reduction push. But now it has evolved into expanding the balance sheet.
Before you start saying these are stimulus efforts, which they most certainly are, the Fed head says the central bank is trying to meet the public’s demand for cash, the banks’ demand for reserves, and perform the primary functions of the Fed.
Meanwhile, the Federal Open Market Committee (FOMC) meets later this month. It is widely expected that the FOMC will trigger another quarter-point cut to interest rates – the third one in 2019. Powell fell short of declaring a rate cut, deferring to his “data dependent” remark.
“We will be data dependent, assessing the outlook and risks to the outlook on a meeting-by-meeting basis. Taking all that into account, we will act as appropriate,” Powell said. “Looking ahead, policy is not on a preset course.”
What is funny is that the Fed is doing everything President Donald Trump wants and he is still unhappy!
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