Federal Reserve Cuts Rates By Half a Point and Signals Era of Easing Has Begun (ft.com)
- Reference: 0175027321
- News link: https://news.slashdot.org/story/24/09/18/185206/federal-reserve-cuts-rates-by-half-a-point-and-signals-era-of-easing-has-begun
- Source link: https://www.ft.com/content/4a24a1d2-f756-4776-9c08-3a671e063e6a
[2]non-paywalled source
on Wednesday and signalled more reductions would follow, launching its first easing cycle since the onset of the pandemic. Financial Times:> The US central bank's first cut in more than four years leaves the federal funds rate at a range of 4.75 per cent. Michelle Bowman, a governor on the Federal Open Market Committee, voted against the decision, favouring a quarter-point reduction. The half-point cut is larger than the Fed's more customary quarter-point pace and suggests the US central bank is concerned about the prospects of a weakening economy after more than a year of holding rates at a 23-year high.
[1] https://www.ft.com/content/4a24a1d2-f756-4776-9c08-3a671e063e6a
[2] https://www.reuters.com/markets/rates-bonds/with-feds-rate-cut-hand-debate-swirls-over-how-big-move-2024-09-18/
Clap harder to resurrect this murderous monster! (Score:2)
"Federal Reserve Cuts Rates By Half a Point and Signals Era of Easing Has Begun"
Does it, though? Certainly that's how it's being perceived . But it seems irresponsible to confuse perception with reality, just because every finance d00d in the country spends all day every day attempting to convert their consensus perception into reality through sheer volume of their applause of Tinkerbell.
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Correction: For Tinkerbell, not of Tinkerbell.
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Either is correct. "Of Tinkerbell" is more attune to British English.
My prices are down (Score:2, Interesting)
Gas is about the same (adjust. for inflation) as it was when Reagan won his second term. I'm back to paying $1.20 for an 8oz pack of cheese slices and $5 bucks for a dozen fancy eggs (they last longer so I pay the extra). Coke is consistently $5 bucks a 12 pack when it was pushing $9/12pack. etc, etc.
The issue was price gouging. The way you fight that is with competition. Cranking interest rates [1]to cause mass layoffs [youtube.com] isn't a solution, it's just our betters yanking our chains.
If you want even lower p
[1] https://www.youtube.com/watch?v=bIHH5Kh2dU0
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It always seemed like a factory of some sort happens to burn down, the price of the product goes up, but when the factory resumes operations, the price only goes down by 1/2 of the increase. It's a common trick being played so that people don't mind the price hike because it's relief from the intervening price hike.
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I'm not sure if you are criticizing the Fed R. or financial advisors.
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I mean, the Federal Reserve is in an impossible position, as yet another unelected federal agency that's supposed to act completely independently of the politicians that appointed them. Which, as a concept, I think is flawed at best. That said, they seem to have, for the most part, acted with integrity, at least in my lifetime.
I am criticizing financial advisors, to be sure, but more broadly, I'm criticizing the entire stock-trading public of America, and perhaps the world, who half the time are like atte
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> I guess what I'm asking is for people to just be more rational.
Humans are barely more than chatty chimps. You're asking too much of simians. Come back in 100 million years to see if another phylum shows more promise.
> yet another unelected federal agency that's supposed to act completely independently of the politicians
Making them directly elected would subject them to the whim of the masses, who are not brighter than politicians on average.
Perhaps they could be appointed kind of like the SCOTUS, bu
About time (Score:2, Insightful)
We have leaked communications from some of the guys in the fed where they say rates should've been cut in July. But, well, there's an election coming up...
In any case there's no indication the rate hikes helped inflation. The targets were 2%, inflation month to month hovered around 3-4%. It stopped when consumers hit their limit on higher prices and when the DOJ started doing anti-trust lawsuits seriously.
For example in the Kroger/Albertson's merger they did a full discovery and found emails where t
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What if mainstream economics has inflation wrong and the real picture was grasped much better by Fischer Black in "Noise"?
"I think that the price level and rate of inflation are literally indeterminate. They are whatever people think they will be. They are determined by expectations, but expectations follow no rational rules. If people believe that certain changes in the money stock will cause changes in the rate of inflation, that may well happen, because their expectations will be built into their long te
Of course the rate hikes didn't help (Score:4, Insightful)
> In any case there's no indication the rate hikes helped inflation.
Of course not. They were printing $2T per year. If you're going to add that much money to the money supply you'd need to go much further than Volcker did in raising the rate in order to avoid a net increase in the money supply.
> Anti-trust law is what'll control inflation. That and increasing supply. Competition & supply are what keep prices down, not mass layoffs and people blowing through their retirement savings.
Anti-trust is only part of it. A massive purge of illegal immigrants and low skill legal immigrants would do even more. Legal or illegal, doesn't matter. The net population increase has had a terrible impact on housing prices. Increasing supply doesn't help there if you are mass importing more population and contrary to what lolbertarians want to believe, immigration has been a net negative for the West since we get half a dozen low to no skill immigrants for every high skill immigrant.
You know who aren't huge wealth producers and tax payers? Low and no skill people. We can't even provide for our own poor effectively, but we mass import them to keep wages down and the natives in line.
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Enjoy your white people labor produce prices.
They switched to slave labor (Score:1)
They use prisoners. Anywhere they can't get cheap immigrants they just use prisoners.
In Europe there's a handful places they couldn't do either and they just implemented a wide variety of automation and process improvement in order to keep prices down.
It turns out we don't actually need people to be brutalized in order to maintain our food supplied we just do it anyway
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Wrong, Trump did a $2trn stimmy and Biden came into office and did another $2trn stimmy. Add in the fact that you couldnt get evicted for a while, student loan payments were paused, than some student loans (held by the government) was forgiven, small business loans given during covid didnt have to get paid back. There was a SHIT ton of stimmy in some form or fashion.
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Didn't we find out that most small business owners want to run their businesses, not sit on their couches?
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I know a few who bought boats .....
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> immigration has been a net negative for the West
And yet every economist on the planet disagrees (even the most ardent anti-immigration Borhas could only find an issue at the very edges) and the Unites States own position as the global superpower flies in the face of this assertion. Is this where we are
Maybe the solution to our problem is to build more houses for people who want to live and work here since, and i know this is wild, more labor means more productivity.
> Low and no skill people.
Dead wrong. Low skill labor still increases productivity and in fact lets more skilled
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I live in Appalachia. I've watched as American workers can't find work because illegal immigrants can get paid less because they don't pay income taxes. Depending on the president, they also face the threat of deportation which does force a more submissive work ethic. This works to the advantage to some of us because we get cheaper labor, but to the disadvantage of blue collar workers. Because American workers can't find work because they pay taxes, we're seeing a huge problem with drug use, especially fent
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> because illegal immigrants can get paid less because they don't pay income taxes
Great, start cracking down on the businesses that hire them then, that's called a "pull factor", people don't immigrate to not work, they come to work.
> they also face the threat of deportation which does force a more submissive work ethic.
Great, issue more work visas as well as crack down on employers. Why does nobody talk about cracking down hard on the employers?
> disadvantage of blue collar workers
Show your data, almost all the data shows immigration, even illegal and even low skilled leads to higher overall wages and growth.
> can't find work because they pay taxes
Back this up for me please. If a company is hiring illegals 9/10 times they using a stolen SSN so tax
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> What are their pro-poor and working class policies?
They just pretend that poor people exist. [1]https://www.nbcnews.com/politi... [nbcnews.com]
[1] https://www.nbcnews.com/politics/politics-news/state-gop-senator-says-never-met-hungry-minnesotan-rcna74969
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Shit. They just pretend that poor people ***DON'T*** exist...
Printing the money isn't the problem (Score:2)
Our economy is growing and it needs a money supply to function. The problem is we printed it and we hand it 10.5 trillion, half of that is tax cuts and the other half is just straight up here have some money, to the top 1%.
They then took that money and used it to buy up all their competitors.
Capitalism without competition is just techno-fuelism.
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> For example in the Kroger/Albertson's merger they did a full discovery and found emails where the guys running the merger talked about how they were selling 500+ stores to get approval for the merger, but selling them to a company they knew wasn't up to the task and would sell them right back in a year or two. .
Link? I just went through (quickly) the FTC complaint with a special focus on their concerns about C&S being handle the load after the sale. There is one quote from a C&S exec, but I can't find any quoted emails from the Korger/Albertson's side.
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[1]https://www.cincinnati.com/sto... [cincinnati.com]
It's painfully obvious from those emails that they don't intend to sell to anyone who can actually run the grocery stores and compete with them. This was used in the trial and it's a big part of why the merger is unlikely to go through.
Usually this kind of discovery just isn't done so that the merger can be rubber stamped. Biden's department of Justice is dead serious about antitrust law enforcement
[1] https://www.cincinnati.com/story/money/2024/08/30/kroger-albertsons-merger-court-hearing-update/75005098007/
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In any case there's no indication the rate hikes helped inflation.
In this case the rate hikes helped increase inflation. Companies claimed they were raising wages (they really weren't, but that's another story) which meant they had to raise prices on their goods and services. That got picked up by the Fed which then raised rates to supposedly slow inflation, but as Powell has stated, his real intention was to [1]cause people to lose their jobs [cbsnews.com].
This increase in rates then allowed companies to raise t
[1] https://www.cbsnews.com/news/fed-interest-rate-hikes-unemployment-increase-layoffs-inflation/
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This comes across as unfounded certainty. The claims don't match observation either; I think perhaps its conflating inflation rate with price level. The Fed is accurate in their statement: Inflation rate has definitely dropped. Price level hasn't dropped, and the Fed hasn't claimed it has (and in fact the Fed doesn't want the price level to drop).
High interest rates don't generally cause companies to raise their prices. Companies do use any excuse to raise their prices, and they will do so until their sal
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I think perhaps its conflating inflation rate with price level.
No, that's not what I said. Maybe I wasn't clear enough. In my last paragraph I said:
> The Fed claiming inflation is coming down is demurement. Inflation may not be rising as much as it was, but the soaring prices companies foisted on us are still in place.
By demurement I mean claiming inflation is coming down while not acknowledging how high prices are. They only look at the inflation figure, not the overall picture.
The Fed doesn't live in reality. To them it's all about the numbers. "Oh look, inflation is only 3%. We can cut rates." Which completely ignores the 50% increase in some food prices (pota
It's a great week! (Score:2)
Inflation is low. Interest rates are dropping. Harris has a growing lead in the polls. Hezbollah members are dying or being crippled for life. Yesterday was the Moon Festival, so we have treats.
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"Inflation is low."
It blows my mind that people can still be wound up like little automatons to believe this, in spit of the evidence of their own eyes
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Inflation happened thanks to the CCP flu disrupting the economy. Now things are back to normal. Prices are higher, but they're not rising like they were, which means inflation is low again.
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First, it's silly to call it the "CCP flu" when your own country originated it and moved the work to China after gain of function research was supposedly halted in 2014. [1]https://www.science.org/conten... [science.org]
Second, what you are talking about is not inflation, it is the change in inflation. But in both cases the numbers are a contrived pack of lies, just like unemployment rates and the establishment jobs report that is comically redacted retroactively on the regular now.
[1] https://www.science.org/content/article/us-halts-funding-new-risky-virus-studies-calls-voluntary-moratorium
transitory inflation redux? (Score:1)
I'm betting this means more [1]transitory inflation [youtube.com] coupled with another Inflation Reduction Act. The last round was a roaring success at tangibly [2]increasing human suffering [theconversation.com] so why not [3]repeat the same folly [youtube.com]?
[1] https://www.youtube.com/watch?v=A2z7XNGEy_Y
[2] https://theconversation.com/us-food-insecurity-rate-rose-to-13-5-in-2023-as-government-benefits-declined-and-food-prices-soared-238262
[3] https://www.youtube.com/watch?v=LdZXm4zTlrA
Causes of the inflation (Score:2)
Inflation had world-wide causes. No one nation "broke prices". First, factories were shut down or scaled back in many countries due to the pandemic. Different nations recovered from the pandemic at different rates, so some wanted products that were now scarce, so prices for them naturally went up (Econ 101).
Others didn't want to pay the high price so instead shopped for other products. But when everyone is doing this at the same time, ALL prices go up, not just those tied to closed factories. It's kind of l
Cut is already priced in (Score:1)
The cut is already priced in, market didn't do much. Heard this on Bloomber; I agree. Yes like others have said, it should have been done in July.
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> it should have been done in July.
But the rate of inflation drop hit a small bump at that time, causing the Fed R. to wait. If they cut too early there's a risk of it triggering a mini econ boom, re-igniting inflation.
It's a job I wouldn't want. You have to decide to punch Peter or punch Paul, so at least one will be angry at you no matter what. (Doing nothing punches Sally.)
It's almost as bad being the Official Middle East Peace Negotiator.
How low will it go? (Score:2)
So they subtle signaled that more will come before the year ends, how low will it go? Prices sure have not decreased despite inflation being "steady"
Re:Election Season Stimulus (Score:5, Insightful)
Hard to say, since it also happens to be the right time to do it.
Re:Election Season Stimulus (Score:4, Insightful)
I think it sucks.
It is been REALLY NICE having money in savings accounts earning actually tangible interest each month....
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It's nice to see you have the luxury of having a savings account, and I do too. Meanwhile, it's been terrible for all of the people who have spent all of their savings trying to stay afloat because wages aren't keeping up with inflation.
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Update your knowledge base: [1]wage growth is outpacing inflation, and has been since February of 2023 [statista.com].
[1] https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/#:~:text=U.S.%20inflation%20rate%20versus%20wage%20growth%202020-2024&text=In%20August%202024%2C%20inflation%20amounted,wage%20growth%20since%20January%202023.
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And it really sucks balls for people trying to buy or build housing, which we desperately need across the entire country to fix very real problems that you probably complain about all the time.
Try to think of someone else besides yourself sometime.
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> And it really sucks balls for people trying to buy or build housing, which we desperately need across the entire country to fix very real problems that you probably complain about all the time.
I'm old enough to remember the double digit interest rates of the 70's and 80's....
It was normal to see 11% levels of interest rates, and yet...no one had problems buying cars or building homes then....
For that matter, I see people buying houses all the time around where I live...6% isn't the end of the world...
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At least in the US and Canada, housing prices have vastly outpaced general inflation and well exceed any differences in interest rates.
Worse due to the changes that started corporations from buying all these houses, rent has skyrocketed even more than home prices. Sure some of us can readily afford houses, but more than 50% of the people in the world's largest economy CANNOT and it's all due to corporate greed and shitty anti-government policies that block housing investments. High density housing in many
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> I think it sucks.
> It is been REALLY NICE having money in savings accounts earning actually tangible interest each month....
You'd be better off putting that money into the market, anyway. Massively higher returns, even with a well-diversified, low-risk investment strategy.
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Have you heard of S&P 500 index funds?
People who lost their jobs (Score:1)
because of the [1]interest rate hikes [youtube.com] and blew through all their savings would probably disagree with you.
And eventually the high interest rates were going to catch up to all of us. Survivor bias means few will admit it, and we're all temporarily inconvenienced millionaires of course. But if this goes on any longer you're gonna lose all your gains and everything else in that savings account just like the hundreds of thousands fired since the rate hikes started.
[1] https://www.youtube.com/watch?v=bIHH5Kh2dU0
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I love how all who pretend the move is not political are repeating the title that says it all
Re:Election Season Stimulus (Score:4, Interesting)
> I love how all who pretend the move is not political are repeating the title that says it all
This type of thinking is exactly the flawed thinking of correlation equals causation.
It's obviously flawed thinking. So, last month, the Fed was anti-Harris for not dropping rates, but now they're anti-Trump for dropping rates. It's almost like reading the made-up analysis of minute-to-minute stock market fluctuations.
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>> I love how all who pretend the move is not political are repeating the title that says it all
> This type of thinking is exactly the flawed thinking of correlation equals causation.
> It's obviously flawed thinking. So, last month, the Fed was anti-Harris for not dropping rates, but now they're anti-Trump for dropping rates. It's almost like reading the made-up analysis of minute-to-minute stock market fluctuations.
Sure, but some people see things as a zero-sum game. While I imagine this happens across the political spectrum, it seems that some people, and especially Trump, live it. With regard to the latter, it seems to be his go-to belief, so it's then not surprising that (some of) his followers believe that too. (Just sayin' in general, not casting aspersions at posters.) It's worse with Trump specifically as he always has to be the one who wins and everyone else has to lose -- in his mind anyway.
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In the cheeto flavored land, everything is anti-Trump. Even when they win elections, it's still anti-Trump.
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> Hard to say, since it also happens to be the right time to do it.
Sorry, but the timing is just too obvious. This is politically motivated. And besides, Inflation will never be brought under control until we go back to higher interest rates. We complain about all the time about people living on credit instead of saving, but why should they save if it doesn't earn them anything? Lower rates encourages running up your credit card.
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>> Hard to say, since it also happens to be the right time to do it.
> Sorry, but the timing is just too obvious. This is politically motivated.
It's really not. All the economic indicators that the Fed looks for to show that it's time to loosen rates have been showing for some time. Many economists think that the Fed is acting too slowly, and should have begun lowering rates months ago. Other central banks around the world did as early as the spring. The Fed beginning to cut rates in September means that the full economic impact won't be felt until after the election. If Powell wanted to help the Democrats with rate cuts, he needed to start no la
Strong claims require strong evidence (Score:2)
> Sorry, but the timing is just too obvious
El Not. If one looked at the unemployment and the inflation curves a year or two ago, extrapolate out, they'd see the "lowering point" roughly corresponds with now. I don't see any evidence of shenanigans. I've been watching Fed R. behavior for too many decades, and they fit the usual pattern.
The early 80's slump kicked our family pretty hard, so I started paying much more attention to economic indicators. (Whether Volcker was too aggressive is squashing inflati
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Would it lessen the politics to simply set rates at zero forever and use indexation of income and savings to protect everyone's real purchasing power no matter how irrational nominal inflation gets?
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Would it lessen the politics to simply set rates at zero forever
Look at Japan for why this is a very bad idea.
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How do you "index savings"?
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> Would it lessen the politics to simply set rates at zero forever and use indexation of income and savings to protect everyone's real purchasing power no matter how irrational nominal inflation gets?
In this country? No. Everything is politics now because it's become apparent that politics is a good way to keep people absolutely batshit fucking crazy angry at each other.
I'd much rather we stop printing new money to hand to the oligarchs every time they stub their toe, creating massive inflation, which wages absolutely do *NOT* keep up with. But, you know, I'd also like dragons to be real and to own my own private space yacht, so, really, if we're talking fantasy, I'll take the space yacht first and GTFO
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> In this country? No. Everything is politics now because it's become apparent that politics is a good way to keep people absolutely batshit fucking crazy angry at each other.
No! The people on my political team aren't the problem. It's the politicians on the other team that are the problem! Now I can justify any action I take against the other team and its members!!!!!!!!!
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>> In this country? No. Everything is politics now because it's become apparent that politics is a good way to keep people absolutely batshit fucking crazy angry at each other.
> No! The people on my political team aren't the problem. It's the politicians on the other team that are the problem! Now I can justify any action I take against the other team and its members!!!!!!!!!
Anybody telling you any politician is on "Your team" is full of shit. They are on their own team. All of them. You just have to choose which one will harm you less going forward. None of them are destined to help the average person. They're far too greedy to worry about such pettiness as serving the people that elect them.
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Um, which part of " and suggests the US central bank is concerned about the prospects of a weakening economy after more than a year of holding rates at a 23-year high " didn't you understand? And the Fed doesn't work for the President, so... [shrug]
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Either possibility would call for a rate cut, as opposed to nightflameauto's obvious implication that it was politically motivated.
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Currently the Fed does not work for the President. But the former alleged president and his Project 25 sycophants have already floated plans to make the Fed. Reserve an arm of the Executive Branch and where the President sets the rates. It will be just like Turkey, and the U.S. will go down the tubes just like Turkey if that happens.
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> And the Fed doesn't work for the President, so...
At the moment anyway. That might change if Trump wins. He has said -- then backed off, then waffled -- that the President, and especially him, should have a say. From [1]Trump says he ‘made a lot of money’ so he should have a say in when you get a rate cut [cnn.com]:
> “I feel the president should have at least a say in there. I feel that strongly,” Trump said toward the end of his press conference. “I made a lot of money. I was very successful. And I think I have a better instinct than, in many cases, people that would be on the Federal Reserve — or the chairman.”
[1] https://www.cnn.com/2024/08/09/economy/trump-federal-reserve-rate-cut-powell/index.html
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Election interference.
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I have noticed that gas prices are suddenly going down. I can't help but wonder how the strategic oil reserve is doing... oh, we're still draining it and we won't be actually replenishing it again until, coincidentally, January. Get ready for another round of $4+ gas and as the contracts are already in place, it won't matter who wins the election.
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> oh, we're still draining it and we won't be actually replenishing it again until, coincidentally, January.
That's some pretty interesting information that you just made up. [1]https://www.spr.doe.gov/dir/di... [doe.gov]
[1] https://www.spr.doe.gov/dir/dir.html
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Idiocy. It should have been cut in July by 1/4. If you're not wealthy, you're struggling. Wages are up, but they have not kept up with inflation for quite some time. We've been in an recession for quite some time, but the fact that the wealthy continue to spend has obfuscated the usual measurements. That inflation is also showing up as supposed increase consumer spending, but adjusted for inflation, consumer spending of the less well off is down and has been down for a while.
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You can't redefine words to mean whatever you want though; it makes it difficult to have discussions.
Right or wrong (and I agree it's probably closer to 'wrong'), recession is defined as two consecutive quarters of falling GDP. We haven't had that; there is no obfuscation.
What you're looking for is more a measure of buying power or standard of living, and hey, there are statistics for that - but reductions in standard of living are orthogonal to recessions, even if highly correlated.
What you're observing i
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If you use financialized numbers for GDP and [1]QE the crap out of it, [statista.com] real production can hit a nadir and [2]you can still claim there is no recession [haver.com].
[1] https://www.statista.com/statistics/1121448/fed-balance-sheet-timeline/
[2] https://www.haver.com/articles/five-reasons-why-the-economy-avoided-recession-in-2023-some-will-be-operative-again-in-2024
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Because they're looking at economic indicators, and what they see signals the time for a rate cut?
The FED is independent, and the FED Chair was appointed by Trump in 2018, so I really don't know what you think you're suggesting here.
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> Gee, I wonder why they cut rates right now, after holding them so high for so long.
Why wonder when you can read TFA? Is it because you think everything is a conspiracy? Are you yourself actually a conspiracy? Maybe you're not real.
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I don't think monetary policy is apolitical so examining political considerations in setting monetary policy is reasonable.
Low interest rates boost asset prices which large numbers* of people desire, thus making the status quo more desirable, thus helping politicians.
_____
* if the number of stock and real estate owners decline and consolidate in the future, this effect may fade but now I think it's a reliable play.
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Becuase they are intentionally tweaking Trump? No, tha'ts highly unlikely but it is exactly what Trump will claim. Trump WANTS a bad economy, and an open border, because it helps his election chances. Remember - For Trump it's all about what's good for him, not what's good for America.