US policy differences will require monitoring as Fed rate cuts spark debate

Fed Chairman Jerome Powell, in his remarks, said the policy interest rate was now in neutral territory, which means it is neither expansionary nor contractionary

The Federal Open Market Committee (FOMC) of the United States (US) Federal Reserve on Wednesday lowered the policy interest rate, the target range for the federal funds rate, by 25 basis points to 3.5-3.75 per cent, taking the total reduction in the current cycle to 175 basis points. Since there had been some doubt in financial markets about the rate action, the delivery of a rate cut pushed stock prices higher. However, the market’s doubt was not unfounded. Two members of the committee voted against the decision to cut, while President Donald Trump’s recent appointee, Stephen Miran, wanted