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The FED Should Cut Rates in September

Summary:
Labor market remains strong. Even so, the Fed should cut rates in September (EPI) Two things are true right now for the U.S. economy:  The labor market is extraordinarily strong when judged by any historical benchmark.  The Federal Reserve is behind the curve in cutting interest rates and should start cutting rates at the Federal Open Market Committee (FOMC) meeting next week. To aim for something like a federal funds rate that is at least two percentage points lower by mid-2025.  These might strike some as being in tension, normally we want the Fed to cut interest rates to stimulate a weak economy. Why then, if the labor market is quite strong, do we need them to cut?   Simply put, the interest rates the Fed controls are now at levels that

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Labor market remains strong. Even so, the Fed should cut rates in September (EPI)

Two things are true right now for the U.S. economy: 

  • The labor market is extraordinarily strong when judged by any historical benchmark. 
  • The Federal Reserve is behind the curve in cutting interest rates and should start cutting rates at the Federal Open Market Committee (FOMC) meeting next week. To aim for something like a federal funds rate that is at least two percentage points lower by mid-2025. 
The FED Should Cut Rates in September

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