On Tuesday, the Federal Reserve dropped cut interests rates by 0.5%, the biggest decrease in rates since 2008. The interest cut comes after President Donald Trump has frequently pressured them to take “big” action.
“We saw a risk to the outlook of the economy and we chose to act,” said Federal Reserve Chair Jerome Powell during a press conference on Tuesday.
On Tuesday, the Fed also noted that more action may be taken in the near future. “The committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy,” said their statement as reported by the Wall Street Journal.
“The Fed’s action reduces the U.S. interest rate to just below 1.25 percent, down from 1.75 percent,” the Washington Post reports. “Fed leaders voted unanimously in favor of the rate reduction, and Powell tried to project a sense of calm during short 13-minute press conference. He said repeatedly that the U.S. economic fundamentals still look healthy, but he said ‘sentiment’ had shifted.”
The Wall Street journal reported: “Tuesday’s cut, which lowered the federal-funds rate to a range between 1% and 1.25%, is the first to occur in between a scheduled policy meeting since the 2008 financial crisis.”
President Trump however was not happy about the rate cuts, arguing that they weren’t enough.
On Monday, President Trump slammed Powell, tweeting, “As usual, Jay Powell and the Federal Reserve are slow to act,” President Trump tweeted. “Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a competitive disadvantage. We should be leading, not following!”
Later in the day, President Trump doubled down:
“Australia’s Central Bank cut interest rates and stated it will most likely further ease in order to make up for China’s Coronavirus situation and slowdown,” he wrote. “They reduced to 0.5%, a record low. Other countries are doing the same thing, if not more so. Our Federal Reserve has us paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!”
On Tuesday, President Trump made it clear that the interest rate cut was not enough:
“The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,” he tweeted. “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”
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