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Illustration: Aïda Amer/Axios

The Fed is doing its best to prop up the U.S. economy in the face of possible economic turbulence, but it's beginning to look like a rudderless ship and it's fast losing the confidence of investors.

Driving the news: The Fed's rate-setting committee cut U.S. interest rates 25 basis points as expected on Wednesday, but did so with 3 dissenting votes for the first time since 2016.

  • The central bank's projections for future policy showed even more discord — 7 members of the 17-member committee said they expect to cut rates again this year, while 5 expect rates to remain at their current level and 5 see rates rising again later in the year.
  • It was a "forceful pushback" against the rate cut, Goldman Sachs economists Jan Hatzius and David Mericle said in a note to clients, and could portend a tougher road for policy action in the future.
  • "[T]he internal inconsistency ... is a reflection of the current divisions within the Fed," said Joseph Brusuelas, chief economist at RSM.

Between the lines: The Fed's more esoteric announcements were even more disappointing and confounding, investors said.

  • The rate cut — typically a sign of economic turmoil — was accompanied by expectations for higher GDP growth this year in the summary of economic projections.
  • Measures intended to stabilize the repo market by lowering key reserve rates were almost universally criticized by economists and money managers, many of whom called it a "Band-Aid" that failed to address the festering problems in the structurally important market.
  • To wit, the New York Fed announced it would need to inject up to $75 billion into the repo market today after losing control of its own interest rate and needing $128 billion of liquidity injections Tuesday and Wednesday.

The big picture: President Trump's trade war, constant criticism and demands for low interest rates have put the Fed in a bind, but Fed chair Jerome Powell and company are not helping their cause either.

  • This is the latest example of the Fed surrendering global leadership on monetary policy.

The last word: "The committee missed an opportunity for a bolder stance that might have provided greater insurance against international risks to the economy," Rick Rieder, CIO of global fixed income at BlackRock, said in a note.

Both the Fed and the European Central Bank lowered interest rates at their policy meetings this month but 3 other major central banks will announce decisions today with no cuts expected.

  • The Bank of Japan made no changes to interest rates at its meeting overnight, and no changes are expected from the Swiss National Bank or the Bank of England at their respective meetings, despite the general easing trend among central banks around the globe.

What they're saying: "Central bank meetings will remain in focus for the next 24 hours with three additional monetary policy announcements on the calendar," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note to clients.

  • "Recent stability in the financial markets will relieve some of the pressure on policymakers."

Go deeper

Mayors press Biden to adopt progressive immigration agenda

Illustration: Sarah Grillo/Axios

A coalition of nearly 200 mayors and county executives is challenging Joe Biden and the incoming Congress to adopt a progressive immigration agenda that would give everyone a pathway to citizenship.

Why it matters: The group's goals, set out in a white paper released today, seem to fall slightly to the left of what the president-elect plans to propose on Inauguration Day — though not far — and come at a time of intense national polarization over immigration.

Caitlin Owens, author of Vitals
16 mins ago - Health

Demand for coronavirus vaccines is outstripping supply

Illustration: Aïda Amer/Axios

Now that nearly half of the U.S. population could be eligible for coronavirus vaccines, America is facing the problem experts thought we’d have all along: demand for the vaccine is outstripping supply.

Why it matters: The Trump administration’s call for states to open up vaccine access to all Americans 65 and older and adults with pre-existing conditions may have helped massage out some bottlenecks in the distribution process, but it’s also led to a different kind of chaos.

Woman who allegedly stole laptop from Pelosi's office to sell to Russia is arrested

Photo: FBI

A woman accused of breaching the Capitol and planning to sell to Russia a laptop or hard drive she allegedly stole from Speaker Nancy Pelosi's office was arrested in Pennsylvania's Middle District Monday, the Department of Justice said.

Driving the news: Riley June Williams, 22, is charged with illegally entering the Capitol as well as violent entry and disorderly conduct. She has not been charged over the laptop allegation and the case remains under investigation, per the DOJ.