NEW YORK/WASHINGTON (Reuters) – Ask a Federal Reserve official if the clutch of interest rate cuts it has delivered this year are helping the economy and you will get a swift answer: Yes.
Fed Chair Jerome Powell said as much on Wednesday after the central bank cut borrowing costs for the third time since July, saying officials “see now more clearly the effects of more accommodative monetary policy on various kinds of consumer activity.”
Goods - Sales - Housing - Growth - Time
“You are seeing strong durable goods sales. You are seeing housing now contributing to growth for the first time in a while. And you are seeing retail sales,” Powell said at his news conference following the Fed’s interest rate announcement. “More broadly, monetary policy is also supporting household spending and home buying by keeping the labor market strong, keeping workers incomes rising, and keeping consumer confidence at high levels.”
Indeed, there is evidence that Powell and his colleagues are not tooting their own horns without some justification.
Housing - Market - Shoots - Mortgage - Rates
The housing market is showing green shoots as mortgage rates have dropped. Car loans are in greater demand, and sales of high-priced vehicles like pickup trucks are near a record. Stocks are reaching fresh highs. Consumers, fortified by a strong labor market, continue to spend.
It is not all wine and roses, however, as business spending, which has been hit by the Trump administration’s trade war with China, has so far not responded to the Fed’s easing with the same gusto.
Look - Ways - Bank - Rate - Reductions
Here is a look at the various ways the central bank’s rate reductions are already showing up throughout the economy:
Lower mortgage rates are helping to revive activity in the U.S. housing market, which stalled last year amid rising rates and higher home prices. Home construction added to growth in the third quarter for the first time in nearly two years, the Commerce Department said...
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