Fed cuts by 25 basis points

  • Fed cuts by 25bps
  • Has provided overnight liquidity injections in the repo market
  • ‘Job gains have been solid, on average, in recent months’

The Fed today cut by 25bps amidst turmoil in the oil markets during the front part of the week and the overnight repo spike just yesterday.

Jerome Powell spoke and argued that economic conditions were solid but that there were some ‘uncertainties’ to this outlook.

There was however a split amongst FOMC members.

Bullard, George and Rosengren preferred a different outcome, with the latter two wanting to maintain Fed Funds at 200-225bp and the former wanting to lower to 150-175bp.

It is of concern to some in the market that Trump potentially has some political sway over the Fed, especially with the election coming up next year.

Of more concern though is if data globally does begin to deteriorate further, especially out of China since the USDCNY is > 7.00 – a potentially deflationary problem for global central banks who have been trying to stoke inflation.

EURUSD fell over the course of the announcement and press conference.

You can read the official statement here.