By CCN.com: If you were hoping that the Federal Reserve would commission an urgent gathering to discuss the fate of interest rates and save the stock market, you’re out of luck. James Bullard, who is at the helm of the Federal Reserve Bank of St. Louis, told Fox Business that an emergency meeting and seemingly any chance of an early rate cut before monetary policymakers meet next month are basically out of the question.
“I don’t think [we need an emergency session]. I think we can act appropriately…What matters is that you’re in the right zone for interest rates.”
Wait, what? The “right zone for interest rates? There are many market strategists who believe the Fed has been off target, arguing instead that monetary policymakers raised rates too aggressively and now have painted themselves into a corner in which they are out of step with the global economy.
The stock market is in recovery mode – at least for today, with the broader indices all advancing. In order for the stock market to hold onto these gains, however, something has to give on the interest rate front. While the Fed is designed to be independent of the stock market, it is still, in many ways, calling the shots.
Stock Market Sentiment
The only thing the stock market would like more than an emergency meeting by the Fed is an emergency meeting plus a 75 basis point rate cut.
The chances of that happening appear slim based on the tone of the Fed, which is widely interpreted as a 25 basis point cut. Nonetheless, stocks have been crying out for some relief. The question is has Jerome Powell and other monetary policymakers been listening? Bullard told Fox Business “we certainly pay attention to markets.” Whether or not that translates into an aggressive rate cut in September remains to be seen.