Looks like Powell is trying to prevent a 'hard landing' next year. With global growth slowing, the biggest risk for the Fed is getting behind the curve since they don't have that much 'ammo' to deal with a big recession or financial crisis.
The Fed's normalization plans were thwarted largely by the disruption and uncertainty surrounding Trump's trade war antics. If the world economy really hits the skids next year, or there's a financial crisis, Powell has very limited means to deal with it. Rickards says it usually takes a 3% cut in rates to get out of a recession, and you can't do that if rates are only at 2.50% or less.
The Fed's ability to do more QE is also extremely constrained. They were only able to get the Fed's bloated balance sheet to just under $4 bil from its peak of ~ $4.5 bil. So not much room there according to Rickards, unless you want to risk a dollar crisis.
The inability of the Fed to adequately normalize could turn out to be one of the biggest mistakes in history. Without Trump's trade war shenanigans they might have at least made the interest rate target. The stakes are so high because if the Fed can't deal with the next big recession or crisis, we're likely looking at the SDRs -- ie an IMF bailout of the world.
