Fed cuts rates again, predicts stronger economic growth

As anticipated, the Federal Open Market Committee (FOMC) ended its two-day monetary-policy setting meeting with a 25 basis point rate cut – the second of the year. NAFCU Chief Economist and Vice President of Research Curt Long said given the split opinions on the committee, NAFCU doesn’t expect any more rate changes this year.

“Today’s widely-expected rate cut has everyone looking to the fourth quarter,” Long said. “The committee was nearly evenly divided among those expecting a hike, a cut, or no changes to rates between now and the end of the year. This three-way splintering was also evident in today’s vote, with two dissents from voters who wanted no action, and another dissent from a member who preferred a 50 basis-point cut.

“NAFCU’s expectation is that the recent run of healthy economic data will continue, resulting in no further rate moves this year,” Long added.

In its decision, the committee cited “implications of global developments for the economic outlook as well as muted inflation pressures” as the reasoning behind its rate cut. It also noted solid job growth, low unemployment, and rising household spending; however, business investments and exports have weakened.


continue reading »