/perspectives/media/fractured-fomc-lowers-interest-rate-as-expected

“Fractured” FOMC Lowers Interest Rate as Expected

Scott Minerd, Chairman of Investments and Global CIO, visited Bloomberg TV to discuss the Fed’s latest rate cut.

September 18, 2019

 

Key Takeaways:

  • As expected the Fed cut rates by 25 bps, but with dissents coming from both sides of the decision.
  • Disagreement on policy direction creates uncertainty over direction from here.
  • With emergency repo operations the Fed fulfills role of “lender of last resort,” but risks losing control of its balance sheet.
  • The Fed has shifted away from data dependency to an expectations-based assessment of the economy.
  • With the zero bound near, a recession would lead to financial repression.


Read Forecasting the Next Recession: Will Rate Cuts Be Enough?

 


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We Are All Government-Sponsored Enterprises Now

The support to corporate America during this economic shutdown risks the creation of a new moral obligation for the U.S. government.


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