The Feds Announce Future Rate Cuts And How It Impact Mortgage Rates

This ARTICLE On The Feds Announce Future Rate Cuts And How It Impact Mortgage Rates Was PUBLISHED On August 23rd, 2019

The Feds Announce Future Rate Cuts
Gustan Cho Associates

The Feds Announce Future Rate Cuts on Friday, August 23rd, 2019 dependent on President Trump’s global trade policies.

  • The Feds Announce Future Rate Cuts is not a done deal
  • Chairman Powell just suggested that the interest rate cuts are on the table and the central bank is ready to react on President Trump’s trade policy decisions
  • This clearly implies an uncertainty to the future economic outlook of the United States

In this article, we will discuss The Feds Announce Future Rate Cuts and the probability that is will come to fruition and how it will impact the mortgage markets.

What Powell Said About The Feds Announce Future Rate Cuts

Federal Reserve Board Chairman Jerome Powell issued the following statement at the Federal Reserve Bank of Kansas City’s annual symposium in Jackson, Wyoming :

While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rule book for international trade. Our challenge now is to do what monetary policy can do to sustain the expansion” to achieve the Fed’s goals of low unemployment and stable inflation.

The Federal Reserve Board cut interest rates in July by 25 basis points. The interest rate cut in July was the first time the Fed cut interest rates in 10 years. Powell is suggesting that the Fed is ready to cut interest rates if it needs to in order to keep the economy out of a Recession. Again, this is dependent on the Trump administration trade policies. This holds especially true with China.

Uncertainty With The Feds Announce Future Rate Cuts

What is Uncertainty With The Feds Announce Future Rate Cuts

The economy is still strong with low unemployment, no signs of major inflation, consumer spending strong, and high wages. Fears of a Recession is increasing. Wall Street’s worries about President Trump’s trade policies sent the stock market lower with triple-digit losses. The markets have concerns about the manufacturing markets. Chairman Powell added:

Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States. There are “no recent precedents to guide any policy response to the current situation.

Chairman Jerome Powell’s statement above was made as China announced they will retaliate against the Trump administration tariffs of spiking taxes on $75 billion worth of products.

  • American merchandise such as agriculture, crude oil, and automobiles will be affected
  • The U.S. and China are on target in increasing the tariffs in the coming weeks and months

This can hurt the economies of both countries which can affect the global financial markets.

Aftermath After Fed Rate Cut In July

What are Aftermath After Fed Rate Cut In July

The Feds Announce Future Rate Cuts is not a done deal per Chairman Jerome Powell.

  • Powell did mention that the Federal Reserve Board July 31st interest rate cut “has been eventful.”
  • Right after the Feds cut interest rates by 25 basis points on July 31st, 2019, President Trump declared the U.S. is going to tax an additional $300 billion dollars in Chinese merchandise

Due to this announcement by Trump, it affected the global financial markets and economy.

Powell said the following:

Risk management enters our decision making because of both the uncertainty about the effects of recent developments and the uncertainty we face regarding structural aspects of the economy. 

President Trump’s Reaction To Powell’s Announcement

What was President Trump's reaction to Powell's announcement?

We all know President Trump does not hide anything he needs to say.

President Trump has a history of criticizing not just Fed Chairman Powell but the Federal Reserve Board. Trump often accuses the Federal Reserve Board of slowing the economy. He blamed the economy was hindered in 2018 because the Fed raised interest rates. He has been preaching the Fed to cut interest rates. President Trump criticized Powell after his announcement today and strongly demanded Power should cut rates more aggressively

Here is what President Trump tweeted immediately after Powell’s announcement:

As usual, the Fed did NOTHING! My only question is, who is our bigger enemy, Jay Powel or Chinese President Xi Jinping? Our Federal Reserve does not allow us to do what we must do. The Feds move like quicksand. Fight or go home!

Fed Chairman Jerome Powell was nominated and appointed by President Donald Trump to a four-year term. Trump has publicly criticizes Jay Powell since the Fed has raised interest rates four times in 2018.

How The Feds Announce Future Rate Cuts Affect Mortgage Rates

How The Feds Announce Future Rate Cuts Affect Mortgage Rates

Mortgage rates are at a 36-month low. It hit another low this week. The current mortgage rates already have that the Fed will cut interest rates in September. However, this can change. If the Feds does not cut interest rates in September, mortgage rates can easily go up. There are mixed emotions on where mortgage rates will go in the near future. Many are hopeful that mortgage rates will slide lower than what is at today. Most borrowers who closed on their home loans last year in 2018 at mortgage rates in the 5.0% can benefit by refinancing today. For more information about the content of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected]

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