Washington CNN Someone is hopeful a small decrease in the Fed Rate will impact the economy (housing, etc.) greatly. While it is a positive move over the next 6 or so months (just kidding), I can not see shall a huge decline in rates forthcoming after a decrease. We still have a ways to go. The Federal Reserve gave an important clue Wednesday that it will likely cut its Benchmark Lending Rate in the coming months. The move would pave the way for lower borrowing costs for Americans on everything from mortgages and car loans to credit cards. While the central bank said it will continue to hold rates at current levels, Fed officials are now wary of any risks surrounding America’s labor market, which has long been a pillar of strength for the
Topics:
Bill Haskell considers the following as important: Fed Chair Powell, US EConomics
This could be interesting, too:
NewDealdemocrat writes Retail Real Sales
Angry Bear writes Planned Tariffs, An Economy Argument with Political Implications
Joel Eissenberg writes Will DOGE be an exercise in futility?
Bill Haskell writes Funding Public Goods Problematic??? Blame the Tax-Dodging Billionaire
Someone is hopeful a small decrease in the Fed Rate will impact the economy (housing, etc.) greatly. While it is a positive move over the next 6 or so months (just kidding), I can not see shall a huge decline in rates forthcoming after a decrease. We still have a ways to go.
The Federal Reserve gave an important clue Wednesday that it will likely cut its Benchmark Lending Rate in the coming months.
The move would pave the way for lower borrowing costs for Americans on everything from mortgages and car loans to credit cards. While the central bank said it will continue to hold rates at current levels, Fed officials are now wary of any risks surrounding America’s labor market, which has long been a pillar of strength for the economy, according to their latest policy statement.
Fed Chair Jerome Powell talked up inflation’s recent progress in his post-meeting news conference, saying “the second quarter’s inflation readings have added to our confidence, and more good data would further strengthen that confidence.” He also conveyed that since the job market seems to be back to a pre-pandemic normal, any additional cooling could be concerning for the Fed.
It’s crucial for the Fed’s top policymaker to sound confident about inflation before the central bank can begin cutting interest rates, and confident he sounded.
No kidding! One false move and the economy will get ugly.
Powell said “inflation has eased notably over the past few years, but remains somewhat elevated from our longer run goal of 2%.” The Fed’s statement also describing inflation as “somewhat” elevated, which wasn’t a word that had been used before to describe inflation since the Fed began to lift rates in early 2022. The Fed’s favorite inflation measure, the Personal Consumption Expenditures index, showed that consumer prices were up 2.5% in June from a year earlier, down from May’s 2.6% annual rate, inching closer to the Fed’s 2% target.
The Fed is still very much wary about inflation, but a bit less so now. Powell even said that “we don’t need to be 100% focusing on inflation.” Indeed, the second quarter really gave Fed officials a huge relief.
That wasn’t just because inflation resumed a downward trend, but also because economic growth remained solid. The government’s latest report on gross domestic product shows the US economy expanding at a robust 2.8% annualized rate from April through June. This after adjusting for seasonal swings and inflation, which was double the rate seen in the first quarter and well above economists’ predictions. Powell called that a “historically unusual” development. Adding . . .
“This is such a welcome outcome for the people we serve. What we’re thinking about all the time is, how do we keep this going? And this is part of that.”
And then there is the Job Market that is on the verge . . .