Markets and Economy

5 Takeaways From the First Fed Rate Cut Since the Financial Crisis

Last month, Federal Reserve policymakers cut the federal funds rate by 25 basis points—the first cut since the Great Recession in 2008. Here’s what could come next.


Although the move to cut rates was widely anticipated ahead of the Federal Open Market Committee meeting in late July, the decision didn’t come easily. In the past, cutting rates only occurred during a financial crisis or when the economy showed signs of distress—yet at the time of the meeting, the economy seemed to be in a favorable position.

“The press conference was destined to be a challenging affair,” Michael Feroli, J.P. Morgan Chief US Economist, wrote in a research note. Fed Chairman Jerome Powell had to defend the decision to cut rates now. In prepared remarks, Powell indicated that information on global growth, trade policy uncertainty and muted inflation developments all motivated the decision to cut rates.

Some key takeaways from the meeting include:

  • Powell may have indicated there is no predetermined path for the funds rate
  • Data that could influence future rate decisions include the evolution of trade uncertainty, global growth and low inflation
  • The Committee ended balance sheet normalization six weeks earlier than schedule
  • In a surprise move, there were two dissenting votes—both the Kansas City Fed President and Boston Fed President voted against the rate cut
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