Fed Slashes Interest Rates In Final Meeting Before Election
The Federal Reserve cut interest rates by 50 basis points on Wednesday in the final meeting of the Federal Open Market Committee (FOMC) before the November election. The cut was larger than most economists predicted and larger than the usual 25 basis point increment by which the FOMC typically moves. The rate cut is the ...
The Federal Reserve cut interest rates by 50 basis points on Wednesday in the final meeting of the Federal Open Market Committee (FOMC) before the November election.
The cut was larger than most economists predicted and larger than the usual 25 basis point increment by which the FOMC typically moves. The rate cut is the first for the Federal Reserve in over four years since after the onset of the COVID-19 pandemic.
The cut reflected FOMC board members’ concern over recent Labor Department data that showed the labor market in a much weaker state than previously thought. Inflation remains higher than the Fed’s 2% target rate — the consumer price index rose 0.2 points in August to 2.5%. Officials cited the Fed’s dual mandate to fight inflation while encouraging full employment to justify its decision to cut rates, however.
“This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving towards a more neutral stance,” Fed Chairman Jerome Powell said at a Wednesday press conference, according to the Financial Times.
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The rate cut comes after a Labor Department review of employment statistics revealed potentially the largest downward revision of jobs estimates in over 15 years. The Bureau of Labor Statistics reported last month that job growth throughout the 12 months ending in March would be revised downward by 818,000 jobs, roughly equivalent to 0.5% of total U.S. jobs.
The potential revision suggests that monthly jobs numbers reported in the year leading up to the annual review have been seriously inflated, painting a much healthier picture of the economy. The size of the interest rate cut suggests that the FOMC was surprised at the size of the correction of Labor Department data revealed last month.
The next Fed meeting is scheduled for November 6-7, the days immediately after the presidential election.
Originally Published at Daily Wire, World Net Daily, or The Blaze
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