Listen: Fed cuts interest rates, signals it may not need to do more
"In Los Angeles. I'm Carl Rozelle Wednesday thirty one July today or as we like to call it around here the day everything changed okay not really I mean the Federal Reserve did cut interest rates today a quarter of a percentage point just like everybody had been guessing. I cut in more than ten years thirty seven hundred something days but still it's a lousy quarter point can on so again. I don't think asking about a quarter point is really the right question. Oh all right you tell me then Fed Chairman J. Paul what the right way to look at this is you have to look back over the course of the year and see the committee moving away from <hes> rate increases to neutral posture too now a rate cut K.. You see an in a Konami which is actually performing pretty well. Growth in the first half of this year is about the same as it wasn't all of eighteen and actually a little better than our our forecast for growth at the end of nineteen all right fair enough but look downsides. We also feel like weak. Global Growth and trade tensions are having effect on the U._S.. US economy well yeah but you'll know what you're doing right thing is there isn't a lot of experience in responding to global trade tensions. Oh so it it is a <hes> <hes> something that <hes> <hes> we haven't faced before and that we're learning by doing it. It is not it's not exactly the same as is watching global growth where you see growth weakening U._C.. Central banks and governments responding with fiscal policy and you see growth strengthening business cycle you had with with with trade tensions which do seem to be having significant effect on financial market conditions and on the economy they evolve in in a different way a translation here if I might the trump administration's trade policies are Sui Generis as economists like to say one of a kind and nobody is really sure what to do about bottom okay back the chair Paolo wrapping up. Thank you on heavy. Take your questions us to as it happens a lot of you emailed or tweeted at us because we asked you to you with questions about the Fed and what we all knew it was going to do today. Daniel Richards from Las Vegas Nevada spoke for many of you when he asked basically why he should care we got an economist once upon a time now a professor of economics at Hamilton College. We got her on the phone to explain the average American should care for a couple couple of reasons. The interest rates affect many different aspects of the economy that actually affect individuals directly one something that it will affect it will affect the cost of loans borrowing costs and especially mortgage rates consumer loan rates like auto loans and credit credit card loans. You should see a response in those rates <hes> directly in response to the Fed rate cut so they should care about borrowing costs but but they should also care more broadly on the impact on the economy it's going to affect the barring of businesses also and when their costs are lowered than they're are more likely to hire people and pay them more so there are a number of different ways that this could affect the average American J.. D. Hanson is from Miami. He got a bit more for technical wants to know about the Fed's inflation target two percent years. We remind you from time to time how asks Mr Anson did they pick that number so the Fed has articulated a longer term goal of two percent for inflation and it it's slightly different than actually having being a target which means that they have some level of commitment to achieving it. They're basically just telling people that this is what we're trying to achieve and and the reality is there is nothing magic about the two percent number. The most important thing about it is that the Fed consistently says that it's going to be two percent because that's what creates stability in the inflation rate but catch of course is the Fed consistently says it wants to percent consistently undershoots as we also tell you from time to time time"