"If there is a big disappointment on the trade front, that would likely to lead to another wave of tariffs and a major risk for the US economy". Finally, if implemented, "Phase 1" of a U.S.
Instead, the central bank said it will "monitor the implications of incoming information for the economic outlook as it assesses the appropriate path" of its target interest rate, a less decisive phrase.
"While the central bank signalled a pause in further cuts for now, it also seemed to pre-commit to keep rates low for the foreseeable future", said Ilya Spivak, a senior currency strategist at DailyFx, adding that a resulting dip in U.S. Treasury bond yields and the dollar were helping gold. This fractured state was on display at the September FOMC meeting - the minutes for that gathering highlighted how some members favored more aggressive rate cuts, while others wanted no cuts at all.
Stock markets nonetheless rose after Powell spoke. By contrast, Japan and Europe's central banks have pushed their own interest rates below zero in a bid to boost their struggling economies. Inflation remains in the Fed's target range, just below 2 percent.
The 0.25% reduction in rates is the third cut in a four month period and drops the band of interest rates to 1.5 to 1.75%.
Analysts, however, aren't so sure. Meanwhile, the hawkish voters (Esther George and Eric Rosengren) still preferred rates to remain steady, meaning that in aggregate, the central bank may be leaning toward leaving interest rates unchanged it December as it now stands.
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A home buyer earning the national median income would need to spend 20.7% of pay to make the monthly principal and interest payment on an average priced home as of the end of September when 30-year fixed rate mortgages were at 3.64%, according to an analysis by Black Knight Inc.
The reality is, ever since July, the market has gotten the accommodative monetary policy it has desired.
"Whenever you see a lowering of trade-deal expectations, it's going to upset markets", said Jeff Kilburg, the CEO of KKM Financial. Falling interest rates have contributed to a modest rebound in the housing market and big-ticket consumer purchases. It was also the second back-to-back reading well below this year's first quarter report of 3.1%.
Although that's still moderate growth, and fears of imminent recession have eased in recent weeks, the Commerce report showed the damage already inflicted by the trade war.
He pointed to trade tensions and Brexit as factors crimping business investment and manufacturing but "overall we see the economy as having been resilient to the winds that have been blowing this year".
Despite some signs of weakness, the Fed expects growth to continue and the job market to remain strong.
"A "Phase One" deal is expected to have only a limited positive outcome for the USA economy", UBS strategist Joni Teves said in a note, adding "it is premature to expect a more substantial deal". "Unemployment has declined again", he said, noting that it is now at a 50-year low.