Welp, it only took numerous poor inflation reports for the Federal Reserve to cut interest rates!
From Fox Business:
Following the central bank’s decision to cut rates for the first time since December 2024, the federal funds rate will sit at a new range of 4% to 4.25%. The cut comes after the Fed left rates unchanged at its first five meetings this year amid economic uncertainty.Policymakers have been monitoring economic data which has shown a slowdown in hiring as businesses grapple with shifts in trade and immigration policy, while inflation has remained elevated and trended higher in recent months as tariff-related price hikes filter through into inflation data.That dynamic has presented a challenge for policymakers in achieving both of the goals of the Fed’s dual mandate to promote maximum employment and stable prices in line with the Fed’s 2% inflation target.
It’s ridiculous that the Federal Reserve has this much monetary power.
End the Fed.
Federal Reserve Chairman Jerome Powell said:
We think it’s appropriate that that we reduce our rates so that we become more neutral. Which will be which presumably will be better for the labor market. You You see people who are sort of more at the margins, so kids coming out of college and younger people minorities are having a hard time finding jobs. The overall job finding rate is very, very low. However, the layoff rate is also very low. So you’ve got a low a low firing, low hiring environment. And the concern is that if you start to see layoffs, the people who are laid off won’t, there won’t be a lot of hiring going on so that could very quickly flow into into higher unemployment.
Okay, so you should have done this in July.
The thing is, the Fed cut rates by 50 last September and continued to do so until former President Joe Biden left office.
So why the caution now? Powell doesn’t have an answer:
There wasn’t widespread support at all for a 50 basis point cut today. You know, I think we’ve done, we’ve done very large rate hikes and very large rate cuts in the last five years, and you tend to do those at a time when, when you feel that policy is out of place and needs to move quickly to a new place. That’s not at all what what I feel certainly now, I feel like our policy has been doing the right thing so far this year, I think we were right to wait and see how tariffs and inflation and the labor market evolved. I think we’re now reacting to, you know, to the much lower level of job creation and other evidence of softening in the labor market, and saying, Well, those risks are maybe, maybe not fully balanced, but moving in the direction of balance now, and so that warrants a change in policy so.
[Featured image via YouTube]
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