To almost no one’s surprise, the Federal Open Market Committee (FOMC) announced Wednesday that it is cutting its Fed funds rate by a quarter-point to a new range of 2.0% to 2.25%. In its statement, the FOMC noted that the cut “supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes” but cautioned that uncertainties about the future remain.
The FOMC said it would “continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.” Two FOMC members–Esther L. George, president of the Kansas City Fed, and Eric S. Rosengren, president of the Boston Fed, voted to keep rates in the previous 2.25% to 2.5% range.
According to the FOMC statement, future adjustments to the Fed funds rate “will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”
The Dow dropped about 60 points on before bouncing back and bouncing lower again and then back up a little and then back down again. The index is down about 90 points (0.12%) for the day shortly after the statement was issued.
The S&P 500 reacted in the same up-and-down fashion and traded down about 0.11% for the day at 3,010.11. The Nasdaq Composite, still sniffing the roses from Apple’s quarterly report, traded up about 0.1% for the day.
In the same statement, the FOMC said it would end on August 1 the scheduled drawdown of its balance sheet, a full two months earlier than planned.
The President, who had been pressuring the FOMC and Fed chair Jerome Powell for a larger cut, has not yet weighed in on Twitter. The committee’s promise to “as appropriate to sustain the expansion,” the same language it used when it last met, is likely to fuel Trump’s ire.