>Signs of job market weakness are minor compared with the evidence that inflation has become entrenched.
Not sure I agree with this. Yes, inflation seems to be stubbornly refusing to drop below 2.5-3% but there are no signs of it accelerating towards 2022 levels. Meanwhile the labor market is showing major signs of stress (unemployment rate is a lagging indicator).
>Capital pouring into the US stock market has driven valuations close to historic highs.
This is a more valid concern, but I’m not a fan of using monetary policy to prick asset price bubbles, it usually ends badly.
I think a 25bp cut next week and then wait and see is sound policy at this point.
Superb_Advisor7885 on
Unpopular opinion but: I think the Fed should stay laser focused on inflation and keep interest rates where they are simply because the policies coming from the Whitehouse are clearly behind the loading job market.
You can’t control irrational policies. Lowering interest rates in order to help the job market could just as easily give Trump a free pass to destroy it even more.
Unemployment can bounce back with sane policy, but when prices go up, that tends to be permanent
Thoth25 on
I think the Fed needs to get rid of the whole idea of a dual mandate. Its only mandate should be price stability. Full employment should be the purview of politicians and fiscal policy. Monetary policy should only focus on the stability of the currency.
Given this, rates should not be lowered because of the persistent inflation. In fact, there’s a strong argument to be made that rates should be a little higher.
Pitiful_Option_108 on
If Jerome Powell and the fed cut rates now and shit spirals way worse it is Trumps wet dream scape goat of saying, “see look at how uesless the Fed are and look at what they done.” I don’t think cutting interest rates are going to exactly help anything as investors are just as worried about if all the tarriffs are in full effect. If they knew that part and how companies and people are trying to readjust to that then investors and everyone could do what they need to do. But right now this adminstration keeps playing the game of will we won’t we with tarriffs. It is why countries around the world are forming economic pacts because they don’t understand or know what America will do next. America right now is like that meme of Charlie from Always Sunny in Philly yelling WILDCARD BITCHES!!!!!!
Matrix0007 on
This Administration will push for cuts, no matter what. They will employ all kinds of strategies to get what they want. The reality of our current economic situation is that WE SHOUKD BE RAISING RATES, not lowering them right now. But, we all know, we have STUPID people in charge right now….
5 Comments
>Signs of job market weakness are minor compared with the evidence that inflation has become entrenched.
Not sure I agree with this. Yes, inflation seems to be stubbornly refusing to drop below 2.5-3% but there are no signs of it accelerating towards 2022 levels. Meanwhile the labor market is showing major signs of stress (unemployment rate is a lagging indicator).
>Capital pouring into the US stock market has driven valuations close to historic highs.
This is a more valid concern, but I’m not a fan of using monetary policy to prick asset price bubbles, it usually ends badly.
I think a 25bp cut next week and then wait and see is sound policy at this point.
Unpopular opinion but: I think the Fed should stay laser focused on inflation and keep interest rates where they are simply because the policies coming from the Whitehouse are clearly behind the loading job market.
You can’t control irrational policies. Lowering interest rates in order to help the job market could just as easily give Trump a free pass to destroy it even more.
Unemployment can bounce back with sane policy, but when prices go up, that tends to be permanent
I think the Fed needs to get rid of the whole idea of a dual mandate. Its only mandate should be price stability. Full employment should be the purview of politicians and fiscal policy. Monetary policy should only focus on the stability of the currency.
Given this, rates should not be lowered because of the persistent inflation. In fact, there’s a strong argument to be made that rates should be a little higher.
If Jerome Powell and the fed cut rates now and shit spirals way worse it is Trumps wet dream scape goat of saying, “see look at how uesless the Fed are and look at what they done.” I don’t think cutting interest rates are going to exactly help anything as investors are just as worried about if all the tarriffs are in full effect. If they knew that part and how companies and people are trying to readjust to that then investors and everyone could do what they need to do. But right now this adminstration keeps playing the game of will we won’t we with tarriffs. It is why countries around the world are forming economic pacts because they don’t understand or know what America will do next. America right now is like that meme of Charlie from Always Sunny in Philly yelling WILDCARD BITCHES!!!!!!
This Administration will push for cuts, no matter what. They will employ all kinds of strategies to get what they want. The reality of our current economic situation is that WE SHOUKD BE RAISING RATES, not lowering them right now. But, we all know, we have STUPID people in charge right now….