The Fed's decision to cut interest rates to a 45-year low of 1% despite an upbeat economic assessment reveals a lack of genuine confidence
The average person might be confused by the discrepancy between the Federal Reserve's words and deeds. He shouldn't feel bad; the professionals do not have much clarity either. The Fed lowered its benchmark overnight interest rate by 25 basis points on 25 June to a 45-year low of 1%. The action was accompanied by a more upbeat assessment of the economic outlook than the one presented at the prior meeting on 6 May, when the Fed opted for inaction. So why did the Fed cut rates in the face of what it called 'a firming in spending, markedly improved financial conditions and labour and produ...
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