It seems that Fed Chair Powell has some explaining to do…
While economists were mostly expecting a 25bps cut, traders were leaning towards a 50bps cut, which eventually happened. This decision has left many people unhappy…
What could have prompted Powell and his colleagues to go for such a significant rate cut? Stocks and home prices are soaring, inflation is stagnant, and recent labor market data doesn’t necessarily justify a 50bps cut.
Could it be that The Fed is not as neutral as it claims to be?
There are also political pressures, with Senator Elizabeth Warren advocating for a 75bps cut. Some Republicans are questioning the timing of this crisis-level rate cut, just two months before the election.
It will be interesting to see how Powell navigates this situation, as he may face criticism regardless of the outcome.
Only time will tell how this decision plays out, and who will bear the consequences in the end.
Best of luck to Mr. Powell as he faces this challenging situation.
Stay tuned to watch Fed Chair Powell speak live (due to start at 1430ET):
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