FOMC

With a tweet, President Trump has reopened the debate about negative interest rates.

Thomas Garretson, fixed income portfolio strategist at RBC Wealth Management, and Craig Bishop, lead strategist, U.S. fixed income strategies at RBC Wealth Management, discuss the upcoming Fed meeting, rate cuts, the divide among participants, the inverted yield curve, Fed independence, and recession. Gary Siegel hosts.

President Donald Trump urged the Federal Reserve to lower interest rates to a level typically reserved for recessions or periods of persistently weak growth, suggesting that such a setting could allow the government to restructure Treasury debt at a lower cost.

Fed still divided, but 25 basis point cut is a good bet.

Federal Reserve Chairman Jerome Powell said the most likely outlook for the U.S. and world economy is continued moderate growth, but the central bank was monitoring “significant risks.”

The Federal Reserve Bank of New York sees a nearly 38% chance of recession by August 2020, up from 31.5% in the July reading.

With the markets expecting rate cuts to continue, the Federal Reserve won't commit to further action before meeting later this month.

Three Federal Reserve Bank presidents said they would cautiously consider supporting a rate cut.

A former top Federal Reserve official suggested the central bank reject interest-rate cuts that would help Donald Trump’s 2020 reelection prospects, drawing swift criticism that such forbearance would jeopardize the independence of a Fed already under fierce attack from the president.

While some Federal Reserve Bank presidents offered hawkish remarks at the Jackson Hole symposium, the markets still expect a 25 basis point cut, and analysts agree.