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Brian Chappatta

Fed Has No Choice But to Tackle Both Repo and Recession

A slump in U.S. manufacturing again raises the specter of a slowdown, making the central bank’s October decision even more complicated.

Jerome Powell has to pull off his best Wallenda imitation.

Jerome Powell has to pull off his best Wallenda imitation.

Photographer: Stefan Wermuth/Bloomberg

Heading into October, it was clear Federal Reserve officials would face a difficult decision at their meeting at the end of the month. Just one day into October, the challenges have already become even more intense. 

Analysts have been expecting that Fed policy makers would probably announce a plan on Oct. 30, after their two-day meeting, to expand the size of the central bank’s balance sheet. The questions would simply have been by how much and whether Chair Jerome Powell could stress that the move wasn’t a return to post-crisis quantitative easing but rather was “organic” growth in line with Fed tradition. It would have been a tough tightrope act to begin with, particularly given Powell’s tendency to speak off the cuff and the fact that he played down the repo market’s mayhem after the Fed’s most recent decision.