Fed Cuts 25; Post-Meeting Press Conference Sinks Stocks
By an 8-2 count, the Fed’s policy-making committee lowered the overnight rate target by 25 basis points. The widely-expected cut was the first in a decade following seven years at zero, and a very gradual tightening process that began in December 2016. In addition to the rate cut, Fed officials announced balance sheet run-off would end two months early on August 1st. This means the Fed will immediately resume reinvestment of all securities maturing from their $4 trillion asset portfolio. The effect on the bond market from these future purchases by the Fed is lower yields on the long end of the curve.