https://wsj.com/economy/central-banking/federal-reserve-cutting-…
Fed officials are trying to balance two risks: One is that they move too slowly to ease policy and the economy finally crumples under the weight of higher interest rates, causing millions of people to lose their jobs.
The big questions now are about when the Fed can start cutting rates and by how much. The answers will matter greatly to households, markets and possibly the 2024 presidential election.
One danger is that Powell and his colleagues—blamed for reacting too slowly to address surging inflation two years ago—will wait too long to lower rates as they ensure inflation is fully extinguished. That mistake could curb economic growth too much, causing a recession.
The Fed’s other big error would be to trim rates too soon, failing to vanquish inflation. The central bank doesn’t want to repeat its 1967 mistake, when it cut rates to bolster faltering growth only to see prices take off. Officials are wary of reducing rates prematurely for fear that new shocks—a run-up in oil prices, for example—ignite a new inflationary surge, as occurred throughout the 1970s.
@TradeTariffHalRepublican6mos6MO
4% inflation is double the mandate. So I'd assume no discussion of cuts until it's closer to 2.5%.
Core is the number he stated is considered with the most weight.
Or he's been lying .
@R1ghtWingBennyGreen6mos6MO
Inflation is completely out of control. The fact that it's down to 3% only means that from the insanely high prices they've allowed everything to get to, it's now only growing at 3%. It was unsustainable before. It's 3% less sustainable per year now. My kids have no chance.
@ExecutiveGeorgeDemocrat6mos6MO
While inflation keeps coming down, no one should have expected Powell to suddenly turn dovish tomorrow. The Fed chair will stay relatively hawkish until right before the Fed cuts rates in 2024.
@Motivated2024Republican6mos6MO
35% of the CPI shelter was 100% higher than its real reading -> due to a surveyed results. If the Fed is smart they should just acknowledge the lag effect. Powell is probably not going to do that and just remind everyone HIGHER for LONGER.
@QuirkyPoliticDemocrat6mos6MO
The Fed and Administration know voters vote their wallet. Drop rates too soon and the good feeling/positive market reaction will ebb, diminishing voter sentiment before November.
@ISIDEWITH6mos6MO
@ISIDEWITH6mos6MO
Goldman Sachs now projects Jerome Powell and the Fed will cut interest rates twice next year with the first cut in Q3
Goldman had previously predicted the Fed to begin cutting rates next December - Reuters
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