One and done is too much like a campaign slogan for the careful bankers of the Federal Reserve, but that was the message from Chairman Powell in his assessment of the US economy and Fed policy. 

“The performance of the [US] economy has been reasonably good. The outlook is also good. We have been monitoring downside risk, particularly from global developments,” said Mr. Powell in his news conference following the Fed announcement.


The dollar gained across the board, a figure against the euro and the sterling, and equities plunged, the Dow lost 334 points and the S&P 500 33 as the 25 basis point cut disappointed hopes for twice that.  

Mr. Powell’s reference to the rate move as a “mid-cycle adjustment to policy” with an “insurance aspect” drove equities to their lows of the day. He later modified his statements saying that rate cuts are still possible.

The FOMC vote was eight in favor of the rate cut with two governors preferring no change in policy. It was the first rate reduction by the central bank since December 2008 at the height of the financial crisis.

Mr. Powell warned against assuming that this was the beginning of a rate cutting cycle.  “That is not what we are seeing now, that’s not our perspective now.’  He noted that the Fed has gradually moved to a more accommodative policy this year from a rate increase last December to a pause for several months and then to this cut.

The dangers that the Fed sees facing the American economy are not homegrown but are global and trade factors from the China dispute and Brexit to the worldwide slowdown in growth.

“There is nothing in the US economy that presents a threat to the US economy, down side risks are coming from abroad,” noted the Fed Chairman.


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