Highlights of the July 31, 2019 Federal Reserve statement:
- Rates lowered to 2.00%-2.25% from 2.25%-2.50%, as expected
- First US rate cut in a decade
- Fed says economic activity is rising at 'moderate rate' versus 'a moderate rate' prior
- Fed says labor market 'remains strong' versus 'remains strong' prior
- 2 dissents with George and Rosengren dissenting
- Repeats that business investment has been soft
- Repeats that " uncertainties about this outlook remain."
- Market-based measures of inflation "remain low" versus "have declined"
- Repeats that survey based measure of inflation "little changed"
- Repeats that inflation "running below" 2% target
- Says cut was "in light of the implications of global developments for the economic outlook as well as muted inflation pressures"
- Fed announces that its balance sheet runoff will end tomorrow (I warned about this)
The previous statement said the Fed " will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion" and also that "uncertainties about this outlook have increased." The line about "uncertainties about this outlook remain" unchanged.
Guidance is also unchanged with the new statement saying " will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion."
The quick view here is that the statement is pretty much identical to the previous one. The market wanted a more-dovish signal. The odds of a Sept cut have fallen to 69% from 78%.
Powell's press conference is at 2:30 pm ET.
