Fed cut rates again

//Fed cut rates again

Fed cut rates again

CNBC: Fed approves quarter-point rate cut but is divided on further action this year

Article published: Sep 18, 2019

IB Economics syllabus: Macroeconomics (monetary policy)

The FED (U.S. Central Bank) has cut the interest rates again by 0.25%. “The implications of global developments for the economic outlook as well as muted inflation pressures” were given as the reason for the move. This is a direct reference to the trade war between the United States and China which negatively affects economic growth and while this is a form of expansionary monetary policy, Jerome Powell (the chairman), said “these cuts [are] a “midcycle adjustment” and not part of a more aggressive strategy to drive rates lower” – in other words, it is to prevent any further fall in U.S. economic growth but the Fed is not expecting a recession as this is just a “midcycle adjustment” (referring to the business cycle when the economy gets closer to its peak).

Source of image: CNBC video

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By | 2019-09-30T21:21:05+00:00 September 30th, 2019|Macro|Comments Off on Fed cut rates again

About the Author:

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.

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