John Metzger, Managing member of the West Palm Beach office of McDonald Hopkins, left, and .Shawn Riley, President of the firm’s Cleveland office.

At the beginning of last week, as the Federal Open Market Committee’s meeting approached and a rate cut appeared likely, we began thinking about the implications of a rate cut for the business community in general and our clients in particular.

For example, at a time when the fundamental economics for real estate ownership are strong, a rate reduction could provide a unique opportunity for owners to refinance loans that are either nearing maturity or may have higher rates. For anyone who had been on the fence, the rate reduction could provide the impetus to refinance or could encourage would-be buyers to complete potential acquisitions or development opportunities that were marginal or even infeasible at current market rates.

Similarly, in a period of low unemployment and growing consumer spending, the American economy does not seem to need a boost. Yet, with a cut, businesses contemplating expansion would find their borrowing costs reduced. To the extent they take advantage of the reduced cost of capital, and make further investments or expand, the Fed will have accomplished its goal.

Then Wednesday arrived with the Fed’s announcement of a 0.25% rate cut. The markets seemed to be disappointed by the meagerness of the cut. Moreover, when Federal Reserve Chairman Jerome Powell addressed what the Fed’s next step would be, he cautioned about assuming more cuts were coming, further confusing the markets. We are left, therefore, wondering whether further rate cuts are on the horizon or whether now is the time to act before rates start increasing.

The Fed’s mixed message—a cut to address concerns about the economy, but a warning that the cut should not be interpreted as a change in direction on rates—may reflect the Fed’s uncertainty about what it needs to do and what it can do. Historically low unemployment in the United States should be driving up inflation and signaling a need for interest-rate increases to cool off the economy. Yet, inflation remains at or below the Fed’s target. Consumer confidence remains high, although consumer debt has reached record levels. And, in contrast with the U.S. economy, which is in its 123^rd month of expansion, the European, Japanese and Chinese economies are slowing. Recent cuts in interest rates by the European Central Bank and the Bank of Japan—coupled with clear messages from both that rates could be cut further—puts upward pressure on the U.S. dollar absent corresponding rate cuts by the Fed. Finally, the trade war with China looms large. It is clearly impacting both the U.S. and Chinese economies, albeit unevenly even within each economy.

The mixed economic messages and the external factors impacting the U.S. economy may be more than the Fed’s tool kit can address. The Fed is charged with promoting stable prices, maximum U.S. employment and moderate long-term interest rates. The tools at its disposal— primarily rate cuts or increases and purchasing debt—are not designed to address a possible breakdown in the inflation/unemployment relationship, conflicting actions by other central banks or the macro-economic impact of a trade war. In other words, if the Fed cuts rates by 25 basis points or raises it by 25 basis points, could the result be more of a psychological impact than a true economic impact because there is so much going on in the world that it cannot control?

What the presidents of the United States and China decide to do during this trade war is having a much greater impact on the economy than 25 basis points. The farmer in Polk County in Florida doesn’t care that he can borrow or refinance for less today. He is wondering where he will sell orange juice. The steel processor in Cuyahoga County in Ohio isn’t impacted by 25 basis points because the tariffs have just made his products so much cheaper to sell and he can raise his prices dramatically.

So, what does this mean for our clients? Unfortunately, in a word: uncertainty. Acting now and taking advantage of lower rates will look wise in hindsight if the U.S. economy continues to expand and interest rates rise (or do not decline further). Conversely, if rates do decline further and the U.S. economy enters a recession, additional debt or higher rate debt will be viewed as a mistake.

We are in unchartered waters. Many of us who have been advising clients on a wide range of restructuring issues since the 1980s have seen so many different ups and downs. We have never, however, experienced anything like this 10-year expansion with a rock-bottom unemployment and minimal inflation. And yet, there is such a sense of foreboding. The truth is that no one knows exactly what is coming next, including the Fed.

John T. Metzger is managing member of the West Palm Beach office of McDonald Hopkins. Shawn M. Riley is the firm’s president.