‘Fed megaphone": the Fed is actually making up for lost time
The Federal Reserve voted today to cut interest rates by 0.5 percentage points for the first time since 2020, and it also chose to make a much bolder start, according to a new article by Nick Timiraos, ‘The Fed's Sounding Board.’ Powell's decision to cut rates by more than most analysts expected a few days ago puts the Fed unwaveringly into a new phase of the fight against inflation: the Fed is now trying to prevent previous rate hikes from further weakening the US labour market. ‘We are committed to maintaining the strength of our economy,’ Powell said at a press conference. ‘This decision reflects our growing confidence that the strength of the labour market can be maintained by appropriately adjusting our policy stance.’ While some Fed officials have argued in recent weeks that the economy is not yet weak enough to warrant a 50 basis point rate cut, others have concluded that this summer's cooling labour market has prompted a case for further rate cuts, as the Fed is effectively making up for lost time.
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