Economy Fed cuts rate by half a percentage point

[HockeyBjj]

Federal Reserve cuts interest rates by half-point; first rate reduction in four years

The Federal Reserve announced the first interest rate cut in four years at its September policy meeting amid progress in slowing down the pace of inflation toward its 2% goal.

www.foxbusiness.com

The Fed's first interest rate cut since March 2020 lowers the benchmark federal funds rate to a range of 4.75% to 5%.

Interest rates had been at a range of 5.25% to 5.5% since July 2023, the highest level since 2001, as the central bank monitored economic data for signs that stubborn inflation was trending toward its 2% target.

Recent months delivered signs of progress that inflation is heading toward the Fed's target, although the latest data showed it isn't quite there yet. Inflation slowed to 2.5% on an annual basis in August, down from 2.9% the month before and well below this inflationary cycle's peak of 9.1% in June 2022.

"Our economy is strong overall and has made significant progress toward our goals over the past two years," Powell said. "This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%."

"I don't see anything in the economy right now that suggests that the likelihood of a recession – sorry, of a downturn – is elevated," Powell said in response to a question about whether the economy is vulnerable to recession. "I don't see that. You see growth at a solid rate, you see inflation coming down, and you see a labor market that's still at very solid levels."

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I think it's a bit too much, but I'm an inflation doomer and jobs reports were starting to slow and any interest change has a very long lag effect on the economy so any change has to be made many months in advance to try and steer towards this soft landing that does look possible unless inflation jumps back up again

Will be funny to see the talking heads that have been saying for the last 6 months the Fed needs to cut rates or a recession is imminent, now say they shouldn't have cut rates yet

@HOLA you're our Stonks thread guy (RIP Rob Mafia and Brackis). What does this mean for our Stonks?

 

[Beechwood]

I'm not terribly surprised that the stock market is down today on the big rate cut from the Fed. The economy has problems and the fed is acknowledging that with the big rate cut.

 

[Misfit23]

Was hoping the rates would stay up, tbh.

 

[Unknown Pleasures]

I don't think it's too much TBH.

I was skeptical about 5 years ago that the central bank rate would ever hit 3.5% again, and rates would be perpetually low by regular standards (not saying would go full on Japan mode, but something in between that and historical averages).

I think at one point the 10 year treasury was sub 3.5%. Then black swan event in COVID happens as well as dislocations from sanctions on Russia which impacts global food and fertilizer supplies and boom, high inflation, high rates.

Now that the COVID piece is pretty much out of the way and in the rear view mirror, aggressively lowering rates to make sure the economy isn't over-cooled is very prudent IMO.

 

[HOLA]

Federal Reserve cuts interest rates by half-point; first rate reduction in four years

The Federal Reserve announced the first interest rate cut in four years at its September policy meeting amid progress in slowing down the pace of inflation toward its 2% goal.

www.foxbusiness.com

The Fed's first interest rate cut since March 2020 lowers the benchmark federal funds rate to a range of 4.75% to 5%.

Interest rates had been at a range of 5.25% to 5.5% since July 2023, the highest level since 2001, as the central bank monitored economic data for signs that stubborn inflation was trending toward its 2% target.

Recent months delivered signs of progress that inflation is heading toward the Fed's target, although the latest data showed it isn't quite there yet. Inflation slowed to 2.5% on an annual basis in August, down from 2.9% the month before and well below this inflationary cycle's peak of 9.1% in June 2022.

"Our economy is strong overall and has made significant progress toward our goals over the past two years," Powell said. "This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%."

"I don't see anything in the economy right now that suggests that the likelihood of a recession – sorry, of a downturn – is elevated," Powell said in response to a question about whether the economy is vulnerable to recession. "I don't see that. You see growth at a solid rate, you see inflation coming down, and you see a labor market that's still at very solid levels."

_________________________________________________

I think it's a bit too much, but I'm an inflation doomer and jobs reports were starting to slow and any interest change has a very long lag effect on the economy so any change has to be made many months in advance to try and steer towards this soft landing that does look possible unless inflation jumps back up again

Will be funny to see the talking heads that have been saying for the last 6 months the Fed needs to cut rates or a recession is imminent, now say they shouldn't have cut rates yet

@HOLA you're our Stonks thread guy (RIP Rob Mafia and Brackis). What does this mean for our Stonks?

Think of interest rates like gravity on an asset. Higher interest rates = stronger gravitational pull. Lowering interest rates creates an environment where it's easier (but doesn't guarantee) for values to take off.