— This is the script of CNBC's news report for China's CCTV on September 19, 2019, Thursday.
The rate cut by the Federal Reserve is not in doubt, and because there are no surprises, so there are no doubts to be criticized by Trump. This time, Trump said directly that Powell and the fed failed again.
Following with 3 phrases to express dissatisfaction "no 'guts,' no sense, no vision!"
Trump has criticized the fed for several months, it can be said that if he can get a chance, then he will blame the fed, if there is no chance to do that, then creating a chance. Is the fed affected by Trump's blame? This is what Powell said when answering reporters' questions at the press conference:
Jerome Powell，Chair of the Federal Reserve
"In terms of the morale of the institution, I'd say it's very high. We're very unified. We feel we're doing the best job we can serving the American people."
So we can see that Powell is trying to defend the dignity of the fed. It's hard to tell whether the fed's morale has been affected, but the divisions within the fed are very clear. 2 of the 10 voting members voted against for the rates cut in July.
By this time, the gap had widened, cutting rates decision got 3 negative votes. The fed's dot plot chart shows 5 of the 17 members in Federal Open Market Committee suggest keep the rates unchanged.
That is they don't agree with the rates cut this time, while 5 members support to do that, but no more rates cut by the end of this year, the rest 7 members think the fed can cut rates again by the end of this year.
The divergence shows that the fed has no preset path to more rate cuts this year, and that disappointed the market, so after the fed released its decision and Powell's speech,
The U.S. stock market dived, then clawed back some gains, but closed nearly flat. 3 stock indexes mixed, without big gain or loss.
Powell and the fed are in dilemma on policy making, some signals on interests rate make investors doubt that the fed may lost it control over short-term interest rates. U.S. short-term interest rates fluctuated on Monday and Tuesday before the fed announced its decision on Wednesday, overnight repo rates which is guaranteed by UST once surged to as high as 10%.
Federal Funds Effective Rate once jumped above 2.3%, which is beyond the fed's target. NYK fed had to invest $128b into the financial system, curbing the situation gets worse. Powell said he will continue to pay attention to this situation and take actions when needed.
But worries still remain in the market; we will keep a close eye on this issue.