Officials are hoping to prevent a gradual cooling in the labor market from turning into a deeper freeze
By Nick Timiraos, The Wall Street Journal, Updated Sept. 18, 2024
The Federal Reserve voted to lower interest rates by a half percentage point, opting for a bolder start in making its first reduction since 2020. The long-anticipated pivot followed an all-out fight against inflation the central bank launched two years ago.
Eleven of 12 Fed voters backed the cut, which will bring the benchmark federal-funds rate to a range between 4.75% and 5%. Quarterly projections released Wednesday showed a narrow majority of officials penciled in cuts that would lower rates by at least a quarter point each at meetings in November and December… [end quote]
It remains to be seen whether the Fed will cut the fed funds rate gradually, maintaining a neutral rate as the endpoint, or whether they will suddenly drop it to a negative real yield as they have done before.
{{ Reality check: Just because Powell and his colleagues don’t expect to find themselves in emergency rate-cut mode doesn’t mean it can’t happen.
In January 2001, the Fed started a rate cutting cycle with a half-point move. In the closed-door meeting, chair Alan Greenspan said that spokespeople “can convey that we’re not all of a sudden signaling the prospect of a massive collapse in the federal funds rate.”
In fact, the Fed would cut rates 10 more times that year, bringing its target rate down from 6% to 1.75%. }}
The Fed waited too long to start cutting rates and are behind the curve. You don’t want the “October Surprise” to be a Fed-induced recession.
Hopefully we’ll learn from history. Or perhaps the Orange One gets another term in office? {{ LOL }}
Remember, Corporate Democrats (and Chamber of Commerce Republicans) are not popular with the general public, only the Coastal elites. They’ll need all the help they can get in November. There is no amount of crazy the other side can spew that will cost them support.