News analysis

Fed rate cut may just be turning a broken dial

Long-awaited event was likely due more to political pressure than economic concerns

Last week's widely anticipated 25-basis-point cut in United States interest rates has met with a muted market response, arguably signalling to longer-term investors - and to a likely frustrated US President Donald Trump - that this was largely a non-event.

While there were key data points - most notably inflation - that supported the case for the directional change, it is hard not to feel that Federal Reserve policy is being shaped more by political pressure than concern around a potential meaningful contraction in economic activity.

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A version of this article appeared in the print edition of The Straits Times on August 05, 2019, with the headline 'Fed rate cut may just be turning a broken dial'. Subscribe