The Federal Reserve has cut its target rate in a move that was widely anticipated, although the size of the reduction has left some analysts unimpressed.
The US central bank cut the target rate by 25 basis points to between 1.75 and 2 per cent, but just seven members of the Federal Open Market Committee backed the move, with two wanting to hold rates and one voting to cut further.
While the move has been largely anticipated by markets, Fed chairman Jerome Powell did not go as far as some commentators would have wished.
The move was criticised by US president Donald Trump on social media, who tweeted: “Jay Powell and the Federal Reserve Fail Again. No ‘guts,’ no sense, no vision! A terrible communicator!"
Below several commentators give their views on what the rate cut means for markets and investors.
“A pragmatic step”
Nancy Curtin (pictured), chief investment officer of Close Brothers Asset Management, said the move was “a pragmatic step” towards the Fed’s goal of “sustaining the expansion” in light of the recent US Treasury yield curve inversion. 
She added that while the US president may have called for more significant and rapid cuts to support the economy, these are not necessary.
“Consumer spending remains strong, jobs and productivity figures are steady, and wage growth continues,” she explained.
The big question, said Curtin, is what comes next.
“Stock and bond yields have been rising, and there’s an argument to be made that the current conditions do not justify further easing this side of Christmas,” she continued, adding that Powell is likely to wait and see if there is any resolution to the US-China trade war before making any decision.
“Fed’s rate cuts look old-fashioned compared with ECB”
Tim Foster, fixed income portfolio manager at Fidelity International, said the move was widely expected and as a result markets should be “relatively unmoved”.
“More disappointingly for investors, the Fed’s ‘dot plot’ of their projections for rates doesn’t show any consensus for further cuts this year,” he noted.
Foster also said that the move paled in comparison with the recent European Central Bank (ECB) rate cut and promise of further support.
“The Fed’s rate cuts also look rather old-fashioned compared with the European Central Bank’s comprehensive package of easing measures last week,” said the Fidelity manager.
“This simplicity could change soon, though, as the Fed’s toolkit for monetary policy proves increasingly ineffective against upward pressure on money market rates.”
“No rocket fuel for markets”
Nigel Green, chief executive of deVere Group, said there was much uncertainty among economists “and the Fed itself”.
“Despite immense pressure from president Trump to cut rates further, to provide rocket fuel to the economy ahead of next year’s election, the Fed appears conscious that the labour market is tight and fears wage inflation will kick in,” he said.
“Also, with the US economy experiencing around 2 per cent growth, which is fairly decent, the Fed is exercising caution over further precautionary rate cuts at this time.”
Stock markets had wanted the Fed to cut rates and may fall as a result, Green warned.
However, he encouraged investors to remain fully invested and diversified “if they’re serious about building and safeguarding their wealth”.
“As ever in times of volatility, there are winners and losers, opportunities and risks,” he added.
“A good fund manager will help investors best position themselves in this regard.”
“More room to breathe”
However, Richard Flynn (pictured), managing director at Charles Schwab, said that the rate cut “should give markets more room to breathe in a macroeconomic environment still overshadowed by trade war uncertainty, Brexit and global growth concerns”. 
But doubts remain over whether it will be enough to reboot the economy, he added.
“The ‘uncertainty’ facing the economy is due largely to trade rather than a function of rates being too high,” he explained.
“Attempting to trade around short-term news is a treacherous task; though hope has emanated from anticipated trade talks in October and the delay of the 1 October tariffs, a comprehensive deal remains elusive.”
Flynn argued that while investor sentiment has broadly improved recently, none of the major issues facing markets have been resolved and there is a heightened risk of uncertainty.