Fed may not have the firepower to save the economy if a recession is coming

https://www.cnbc.com/2019/08/15/trump-wants-fed-rate-cuts-unclear-if-they-would-help.html

President Donald Trump wants the Federal Reserve to help head off a feared economic slowdown, but it’s not clear the central bank has enough firepower left to do so.

Besides, some economists say, there’s really not much reason for the Fed to act any more aggressively than it already plans, considering that growth signs remain intact, though dinged a little bit by worries over tariffs and a slowdown in some other areas outside the U.S.

“Federal Reserve officials have some explaining to do when it comes to cutting interest rates and driving down the yields on safe investments like Treasury bonds and notes to near record low levels,” Chris Rupkey, chief financial economist at MUFG, said in a note following a raft of positive economic data on Thursday.

“They don’t need to explain their rate cuts to voters or to the Trump economics team, but they will have to explain themselves to the history books. The Fed’s interest rate cut looks more out of line than ever given the strength of the economy,” he added. “Recession? What recession? That’s what we want to know.”

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