Summary
Here’s a quick summary of what happened today:
The US Federal Reserve cut interest rates by a sizeable half-point, the first cut since rates hit zero in 2020.
Though there was much anticipation for the cut, Wall Street opened with a shrug toward the upcoming announcement, staying relatively flat on Wednesday.
Fed chair Jerome Powell, in remarks after the announcement, said that the cut marks the start of a “recalibration” of Fed policy. For the last two years, the central bank has been focused on price increases. Now, Fed officials see inflation has stabilized and are paying close to the unemployment rate, which has increased over the last few months.
Powell also responded to criticisms that the rate cut seems politically motivated since it’s happening so close to the election. Donald Trump in particular has suggested that the Fed is politically motivated and that he would want a stronger say in interest rates as president. “We’re going into this meeting in particular and asking what is the right thing to do for the people we serve,” Powell said. “That’s always what it is, it’s never about anything else”.
Powell also said the likelihood of a recession from his standpoint is low. “I don’t see anything in the economy that suggests the likelihood of a downturn is elevated,” he said.
We’re closing this blog for the day. Thanks for reading.
Fed chair Jerome Powell just wrapped up the press conference by saying that he sees inflation well-balanced with the labor market right now and the possibility of a recession is low.
“I don’t see anything in the economy that suggests the likelihood of a downturn is elevated. I don’t see that,” Powell said. “You see growth at a solid rate. You see inflation coming down and see a labor market that is still at very solid levels. So I don’t really see that, no.”
