Fed’s Big Bang
Fed’s Big Bang
Économiste en chef délégué et premier directeur général
Michael Gregory est membre de l’équipe responsable de l’analyse de l’économie et des marchés financiers nord-américain…
Michael Gregory est membre de l’équipe responsable de l’analyse de l’économie et des marchés financiers nord-américain…
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Disponible en anglais seulement
The FOMC cut policy rates by 50 bps on September 18, lowering the target range for the fed funds rate to 4.75%-to-5.00%. In the absence of a financial crisis or an economic calamity, this was a historically big way to begin a rate cut campaign. Chair Powell called it a “recalibration” designed to push “policy down over time to a more neutral level” and, in a manner “to make sure that we don’t fall behind”. Tellingly, Powell said if the Fed had the July employment report in hand for the previous FOMC confab (it was released two days later), “we might have well” cut rates at the time. In some respect, September’s move was a catch-up for a missed July 31 action.
Powell said: “As inflation has declined and the labor market has cooled, the upside risks to inflation have diminished and the downside risks to employment have increased. We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks to both sides of our dual mandate.” And to prevent tipping the balance of risk, inflation and labour market performance on the ground now necessitates a more neutral policy stance.
FULL REPORT (en anglais seulement)
