Fox Business anchors size up the Fed rate cut and what's next for Trump and Powell
President Trump has been vocal about his criticism about the way Federal Reserve Chairman Jerome Powell has doled out little-to-no interest rate cuts, and he was quick to complain again on Wednesday after the Fed announced a rate cut half of what markets were hoping for.
“No ‘guts,’ no sense, no vision,” Trump tweeted after the announcement.
FOX Business’ Neil Cavuto, host of “Cavuto: Coast to Coast,” said he wasn’t surprised to see more criticism from Trump.
“He’s clearly disappointed,” Cavuto said. “He wants bigger and quicker cuts, and he’s not getting them. Suffice it to say, Hell hath no fury like a president, especially this president, disappointed yet again.”
Cavuto said he understood the president’s concern, but also noted that economies in some of the countries lowering their rates “aren’t exactly firing on all cylinders” and aren’t necessarily something the U.S. should emulate.
“My issue is the economy already is strong, or certainly strong enough that the Federal Reserve doesn’t have to be doing this,” he said.
David Asman, co-anchor “Bulls & Bears,” said it’s unlikely that Trump will actually fire Powell as some have suggested and noted that some voting Fed members wanted no interest rate cuts at all.
“He’s worried that with Europe and Japan issues $16 trillion worth of negative interest rate bonds, pour rates have to come down more to make our exports more competitive,” Asman said. “He’s got a point that the Fed has an important role in maintaining the dollar’s parity against foreign currencies.”
It was the second interest rate cut in three months, lowering the federal funds rate between 1.75 percent and 2 percent. Officials with the Fed said they made the cut “to keep the economy strong.”
Connell McShane, co-host of “After the Bell,” noted that recent data has shown that the economy is hanging in pretty well, despite slowing in certain areas, like manufacturing.
“That’s why you could easily make arguments for Powell and company to cut rates and/or leave them as is. It’s also why we see so much disagreement, or diversity, on the committee itself,” McShane said. “However, most investors were looking for a cut and we likely would have seen a large stock market sell-off if we didn’t get one.”
Cavuto believes the markets seemed “more confused than relieved” by the news of Wednesday's cut.
“We swung within a more-than-200-point range before stocks ended the day kind of where they began,” he said. “Remember, confusion isn’t always better, especially when it comes to the Federal Reserve and whether it’s going to cut rates again or not.”
Jerome Powell, chairman of the U.S. Federal Reserve, speaks during an event at the University of Zurich in Zurich, Switzerland, on Friday, Sept. 6, 2019. Powell said the most likely outlook for the U.S. and world economy is continued moderate growth,
While Powell didn’t say if the Fed will definitely cut rates again, his comments also didn’t sink the market like they have previous times, FOX Business’ Charles Payne, host of “Making Money,” wanted to remind Fed watchers.
“The move will keep the economic expansion going, helping consumers and encouraging investments,” Payne said.
And the stock market did hang in pretty well, initially selling off but starting to rally when Powell talked about expanding the Fed’s balance sheet sooner rather than later.
“Basically, he’s willing to go back into ‘money printing mode’ if needed and stocks seemed to like that,” McShane said. “More than anything, investors were looking for as much clarity as possible on what comes next today. They didn’t really get that. The only thing clear from Powell’s comments and the Fed statement is there is no clarity.”
But nothing is creating more uncertainty than the trade war, declared McShane. “Certainty is what investors and businesses crave and there’s just no way to get that in this environment,” he said.
Still, Payne said, the White House “will remain furious” as long as Trump can’t get the same response out of the Fed that Chinese President Xi Jinping gets from the People’s Bank of China.
U.S. President Donald Trump and China's President Xi Jinping make joint statements at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj - RC167AEF0C00
“Many market observers agree with Trump's frustration, which is now underscored by the fact the U.S. financial system ran out of dollars this week — something that wouldn't have happened if the Fed had not taken money out of the system,” Payne said.
If we do get a slowdown or a recession, it most likely will be brought on by the president’s trade policy, McShane said.
“It seems obvious he wants someone to blame if that slowdown comes to fruition,” McShane said. “That someone is Jay Powell.”