WASHINGTON (Reuters) – A year ago, U.S. Federal Reserve Chair Jerome Powell held a “remarkably positive outlook” for an economy enjoying a “historically rare” combination of good news including low unemployment, steady inflation and strong growth that were all expected to continue.
When the Fed meets this week, the discussion will be about just how badly that outlook has eroded, and whether officials should still describe themselves as simply tinkering with policies that are about right, or embarked on a more aggressive fight to keep the U.S. recovery on track.
Decision - Interest - Rates - Quarter - Percentage
A headline decision to cut interest rates by a quarter of a percentage point is widely expected. More importantly, the Fed’s language and new economic projections will show how deeply a summer of trouble has been felt – from an intensifying U.S.-China trade war and the relaunch of crisis-style stimulus by the European Central Bank to a stream of weak manufacturing data that may hint at larger problems for the United States.
“At the end of 2018 it looked like the economy was moving forward in a continued solid manner,” said David Wilcox, director for the Fed’s division of statistics and research until the end of last year and now a fellow at the Peterson Institute for International Economics.
Risks - Upside - Radar - Screen - Anybody
“The risks were predominantly to the upside and it was not prominent on our radar screen or anybody’s that the trade war’s machinations would be taken to the extent that they have been…The news from abroad, by wide consensus, has been disappointing.”
The U.S. Federal Open Market Committee meets on Tuesday and Wednesday, with a press conference by Powell scheduled to follow the release of the central bank’s statement.
Fed - Action - Target - Policy - Rate
The Fed’s likely action to lower its target policy rate to a range of between 1.75% and 2.00%, policymakers hope, will boost the economy by easing borrowing costs...
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