HOUSTON/NEW YORK- After a year-long struggle with bond markets, the Trump administration, and each other, Federal Reserve policymakers found their way to a compromise this week with a rate cut that even the White House said had put monetary policy in a much better place.
The US central bank’s monetary policy had been too tight and hurt the economy, but “that huge obstacle to growth is now waning” after the rate cut announced on Wednesday, top White House economic adviser Larry Kudlow said.
Though President Donald Trump himself has remained critical of the Fed, the combination of the lowering of rates and a stronger-than-expected jobs report on Friday appeared to lift the sustained pressure that has been on the central bank to easy monetary policy since last year.
Along with Kudlow’s comments, which were coupled with a statement that there was no discussion underway to try to remove Fed Chair Jerome Powell from office, global bond markets reduced bets the Fed would cut rates again anytime soon.
Gaps between market expectations and the Fed’s own outlook have been wide at times this year, a source of concern for policymakers who don’t want to kowtow to markets, but also don’t want to surprise or disrupt them.
But the two are now roughly in line with the idea that the Fed is on hold and the economy continuing to chug along, a fact highlighted by data showing 128,000 jobs were created in October – a number that was depressed by a General Motors strike but higher than expected. – Reuters