Powell Says September Rate Cuts "On the Table"

I know a particular poster who is going to be very upset by this news.

 

He knows every letter of every word he puts on the record will impact the global economy, so I’m not sure even a bad month of inflation or great month of unemployment changes anything at this point.

They are going to cut rates or he would have used more cautious language.

Kind of hard to discuss on a political message board because everything will go back to Trump or Biden even though the Fed truly doesn’t care.

 

Just in time for the election! Nice job to the Illuminati masters of all.

 

Cutting rates could help reduce inflation. That's right, you read correctly. A main driver of inflation is the expectation of inflation...this FED has been keenly aware of this. A small rate cut would likely be interpreted as the FED feeling good about future inflation which lowers expectations of inflation which lowers inflation. In fact, the FED's statement could help further cool inf.

 

Rates on the table if.....

Baked in for September? We've heard this consistently since the fall of 2023.

The Federal Reserve Policy Release:

Federal Reserve Board - Federal Reserve issues FOMC statement

You decide if this statement release means a September rate cut.

Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee's 2 percent inflation objective.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

 

Does this mean that we won't be seeing the recession that Okee has been predicting once a month for several years now?

 

Difference this time is Powell is the one talking. Experts have predicted rate cuts once inflation drops below 3% and unemployment above 4%. It just took a while to get there. Now, we're here, and the FED said today that unless something drastic happens, there will be rate cuts in September.

 

Powell talking and what you said is not accurate:

The Fed - Live Video (federalreserve.gov)

There is nothing baked in at this point although the media is practically demanding it in their questions.

The labor market is fine, 4% unemployment is well below historical levels, but inflation is still too high at PCE 2.5% and Core PCE at 2.6%, "not quite there yet."

Compares to late 2019, but inflation was below 2% at that time.

Focused on being in a good place where the policy is now.

The Fed is not prepared to make a future recommendation on timing. The Fed needs to see more. Wants inflation sustainably under 2.0%.

 

Again, it's not just about where the numbers are. It's also about which way the needle is moving. If say unemployment ticks up another .1% and inflation drops to 2.8%, does the FED do nothing because where the numbers are? Or, do they act because the indicators are moving in directions that say it's a good time for a rate cut now, before things go too far?

It's the latter, and Powell basically said that today. If the current trends continue, there will be cuts in Sept. Current snapshots never tell the whole story.

 

Again, that is not at all what Powell said. The press conference and questions are all there. Do yourself a favor and actually watch before commenting.

 

But our resident economic experts here say that we should keep the rates where they are. I wonder who is right here... LMFAO!

Loser Leftists don't know a thing about the economy.

 

I did. Asked unlike you, I can read between the lines. At any other point post pandemic, has Powell stated anything like rate cuts will be on the table for the next meeting? Not that I can remember.

Powell won't make direct statements. But he does hint at what is coming. And today, he stated unless something drastic happens, and current trends continue, there will be a cut in Sept.

 

I learned about reading between the lines and the importance of the Fed’s language from a macroeconomics class I took at UF (which I graduated summa cum laude from with a degree in finance).

I doubled down on that when I got an MBA from Northwestern and took another class in macro economics under a former governor of the Federal Reserve. I only bring that up because I am opinionated about plenty of topics on here, but I am pretty well educated on this one.

Your point is extremely spot on, but it isn’t isolated to Powell post-pandemic. Their choice of language is all but guaranteeing a rate cut. They aren’t politicians and they don’t promise anything. Language like today’s is what they use to signal an impending rate cut.

 

Let’s make this more interesting. The debt and equity markets have fully priced in a 25 bps rate cut in September.

What is a good trade I should make to offset my view and the market’s view to hedge for the tiny, minuscule chance the Fed’s don’t cut rates.

I love contrarian views and wish I would have shorted housing stocks when there was nowhere but up to go in 2006.

You seem to be pretty convinced, so how do we capitalize on the market’s irrational read of the Fed?

 

I don’t think you can at this point.

If the Fed cuts 50bps it will be negative for the market short term.

Barring some black swan it seems like 25 bps is happening.

I didn’t think they would a few months ago but the trend has shifted.

 

QUOTE="cluckugator, post: 16680843, member: 8651"]Let’s make this more interesting. The debt and equity markets have fully priced in a 25 bps rate cut in September.

What is a good trade I should make to offset my view and the market’s view to hedge for the tiny, minuscule chance the Fed’s don’t cut rates.

I love contrarian views and wish I would have shorted housing stocks when there was nowhere but up to go in 2006.

You seem to be pretty convinced, so how do we capitalize on the market’s irrational read of the Fed?[/QUOTE]

Convinced nothing is set and data for July, August, and into September will be considered before a rate cut decision can be considered. This is what Powell said.

 

Translation: The US economy is in GREAT shape....strongest in the world.

Thank you, Joe Biden and Kamala Harris.