During the July monetary policy meeting, some prominent economists suggested that the Federal Reserve should have lowered rates. However, the central bank decided against cutting its benchmark lending rate, as noted by former Fed Vice Chair Alan Blinder and Nobel prize-winner Paul Krugman.
Following this decision, analysts are now anticipating that the Fed will implement rate cuts of half a point in both September and November to compensate for the missed opportunity in July.
The Federal Reserve typically bases its decisions on factors such as inflation and the job market. For instance, in the summer of 2022, when inflation reached 40-year highs, the Fed responded by increasing rates by three-quarters of a point. Conversely, during the Great Recession, the Fed opted to lower rates by three-quarters of a point at multiple meetings.
