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Federal Interest Rate Drops

Federal Interest Rate Drops

August 23, 2019

On August 1, 2019, Fed Chair Jerome Powell and the Federal Reserve lowered the benchmark rate for the first time in over a decade. The target range is now 2% to 2.25%, a cut of 25 basis points.1 In their statement, the Fed mentioned “implications of global developments for the economic outlook, as well as muted inflation pressures.” Powell's comment about a "mid-cycle adjustment" unsettled investors who couldn’t determine whether the rate cut was a one-time event or part of a monetary-easing cycle.2 

This Is No Surprise
These events aren’t exactly happening out of nowhere. Interest rates haven’t dropped since 2008, so financial professionals and investors have been anticipating this event for some time. The Fed has been hinting at cutting rates since January of this year.3 The good news is that the Fed is hedging its bets. A quarter-point reduction is a relatively cautious move that allows the economy, and the Fed, some flexibility as we look ahead.1

What Does The Cut Mean for You?
Remember: rate cuts and other economic factors are taken into account when developing your financial strategy. It’s a bit like driving to a vacation destination: when plotting out your trip, it’s wise to take factors like slow traffic, construction detours, and other “unknowns” into account. Arriving at your goal means anticipating the unanticipated. That’s why I’m here.

Reach Out Anytime

I’m always available to talk about your goals and how economic events may or may not change the roadmap of your financial strategy. Feel free to give me a call or set up an appointment anytime.

1 - CNBC, July 31, 2019
2 - CNBC, July 31, 2019
3 - CNBC, January 4, 201

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