The Fed is also seeing some warning signs on the horizon, and the decrease in rates was a response to both domestic and global trends. “We are starting to see the stimulus effects of the 2017 tax cut start to wane,” says Pascale. “There was an initial burst of growth attributable to the cuts, and that is starting to wind down. There are also some troublesome signs in Europe, particularly in Germany’s industrial output. These storm clouds, including the tariffs and potential trade wars, are worrying the Fed as far as their future outlook.”

While the Fed had telegraphed the cut, many investors were expecting more than the quarter-point cut, and so far the markets have not responded well to the difference. “The Fed had so heavily telegraphed a cut that it was priced into markets along with further rate cuts,” says Pascale. “When something like that is priced in and then taken away, the market often reacts negatively as all assets then need to be marked to market.”

However, with some stormy economic indicators, it could be hard to predict the Fed’s future moves. “Many were expecting either a half-point cut or an indication that more cuts were on the way,” says Pascale. “The Fed gave a single rate cut and implied it was an isolated event, not the first of many. The markets have reacted very negatively. The volatility has been exacerbated by the latest trade disputes and tariffs. I think that it is important because it seems like some of the escalating trade tensions are forcing the Fed’s hand to keep cutting rates. I expect to see one more quarter point rate cut this year.”