Flashback: Powell cut rates when it made no sense, right before the 2024 election: U.S. Fed cuts its key rate by 50 basis points in dramatic shift

[shockedcanadian]

I remember when this happened I thought to myself "inflation is the #1 or #2 issue for Americans and he cut rates, I think .50 if I'm not mistaken. That is not only an ill advised cut when inflation was high, but it was a deep cut. Not .25, but 50 basis points. Wow

Was he able to ever justify this deep cut or is it in the same category as "the signing of trillions of dollars into the economy via I.R.A wont impact inflation"?

If the federal reserve isn't in your Constitution, maybe Trump should offer a list of 3 future federal reserve choices, or even the person he will choose, and have them talk about cutting rates as comfort to the economy since they know Powell will be fired as soon as possible.

The big fight now is for the survival of the West, liberty, Judeo-Christian values and capitalism. If China wins, all of the aforementioned are lost. The last element you need is politicized agencies who are supposed to be independent but aren't really.

U.S. Fed cuts its key rate by 50 basis points in dramatic shift - National | Globalnews.ca

The U.S. Federal Reserve delivered an oversized interest rate cut of 50 basis points, reflecting confidence in taming inflation but concern over the economy.

globalnews.ca

The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates helped tame inflation but that also made borrowing painfully expensive for American consumers.

The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing. Coming just weeks before the presidential election, the Fed’s move also has the potential to scramble the economic landscape just as Americans prepare to vote.

The central bank’s action lowered its key rate to roughly 4.8%, down from a two-decade high of 5.3%, where it had stood for 14 months as it struggled to curb the worst inflation streak in four decades. Inflation has tumbled from a peak of 9.1% in mid-2022 to a three-year low of 2.5% in August, not far above the Fed’s 2% target.

 

[jwoodie]

I am concerned about the reported unanimity of Federal Open Market Committee (FOMC) votes on interest rates. Are there really no dissenting opinions (!) or is it some sort of coverup of internal disagreements? Or does Chairman Powell effectively rule by decree?

 

[bendog]

IF Trump actually applies tariffs raising the cost of a good even 50%, let alone 100% or more, WHILE CUTTING TAXES THAT WILL INCREASE THE MONEY SUPPLY, the Fed has a duty to forestall inflation by raising rates. Unfortunately, the fed also has to look to full employment but guess what .... we already have that.

But like most of what Trump says ... I don't think his tariffs will come to pass. (-: But both the EU and Jina are negotiating (and not with US) trade deals. And they both hate Trump.

 

[yidnar]

IF Trump actually applies tariffs raising the cost of a good even 50%, let alone 100% or more, WHILE CUTTING TAXES THAT WILL INCREASE THE MONEY SUPPLY, the Fed has a duty to forestall inflation by raising rates. Unfortunately, the fed also has to look to full employment but guess what .... we already have that.

But like most of what Trump says ... I don't think his tariffs will come to pass. (-: But both the EU and Jina are negotiating (and not with US) trade deals. And they both hate Trump.

https://www.nasdaq.com/articles/stocks-climb-trade-deal-optimism-and-strong-q1-earnings

 

[Care4all]

I remember when this happened I thought to myself "inflation is the #1 or #2 issue for Americans and he cut rates, I think .50 if I'm not mistaken. That is not only an ill advised cut when inflation was high, but it was a deep cut. Not .25, but 50 basis points. Wow

Was he able to ever justify this deep cut or is it in the same category as "the signing of trillions of dollars into the economy via I.R.A wont impact inflation"?

If the federal reserve isn't in your Constitution, maybe Trump should offer a list of 3 future federal reserve choices, or even the person he will choose, and have them talk about cutting rates as comfort to the economy since they know Powell will be fired as soon as possible.

The big fight now is for the survival of the West, liberty, Judeo-Christian values and capitalism. If China wins, all of the aforementioned are lost. The last element you need is politicized agencies who are supposed to be independent but aren't really.

U.S. Fed cuts its key rate by 50 basis points in dramatic shift - National | Globalnews.ca

The U.S. Federal Reserve delivered an oversized interest rate cut of 50 basis points, reflecting confidence in taming inflation but concern over the economy.

globalnews.ca

The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates helped tame inflation but that also made borrowing painfully expensive for American consumers.

The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing. Coming just weeks before the presidential election, the Fed’s move also has the potential to scramble the economic landscape just as Americans prepare to vote.

The central bank’s action lowered its key rate to roughly 4.8%, down from a two-decade high of 5.3%, where it had stood for 14 months as it struggled to curb the worst inflation streak in four decades. Inflation has tumbled from a peak of 9.1% in mid-2022 to a three-year low of 2.5% in August, not far above the Fed’s 2% target.

Generally, when inflation is high, it is because supply is low and demand is high, and the Fed raises rates to slow the purchases (demand) while the supply of 'whatever' is low, which works to reduce inflation rates.
Borrowing rates drop, when inflation rate goes down, is my understanding???

 

[shockedcanadian]

Generally, when inflation is high, it is because supply is low and demand is high, and the Fed raises rates to slow the purchases (demand) while the supply of 'whatever' is low, which works to reduce inflation rates.
Borrowing rates drop, when inflation rate goes down, is my understanding???

There are multiple moving parts and facts which is what makes economics interesting to me. Interest rates have multiple purposes including stimulating a slow or overheated economy etc or offsetting other government decisions.

For the purposes of this interest rate decision that he made, basically inflation is due to the high excessive supply of money in the economy and increasing rates would make it less desirable to borrow and thus, decrease the supply.

In turn, lowering the interest rates as he did, 50 basis points at that; would encourage borrowing and hence increase the money supply. This in turn would continue to increase prices at a time when prices were already high.

He did so against any logic as inflation was high so he should not have made this decision, it defied logjc. So, from what I can tell his intention was to encourage more borrowing and increased investment to overheat the economy right as the election was occurring so that citizens would artificially believe the economy was booming, helping Harris.

It didn't work clearly as Trump won, but the decrease in rates was a real head scratcher and it made getting inflation under control even more difficult.

The irony of all this is though that it gives Trump even more leeway since a slowing down of an overleveraged economy would be good for citizens since it steadies inflation. This would include decreases in the size of government, government spending (something the GOP STILl refuse to do), among other actions

In my opinion, Powell is either a partisan or a really bad economist.

 

[itfitzme]

I remember when this happened I thought to myself "inflation is the #1 or #2 issue for Americans and he cut rates, I think .50 if I'm not mistaken. That is not only an ill advised cut when inflation was high, but it was a deep cut. Not .25, but 50 basis points. Wow

Was he able to ever justify this deep cut or is it in the same category as "the signing of trillions of dollars into the economy via I.R.A wont impact inflation"?

If the federal reserve isn't in your Constitution, maybe Trump should offer a list of 3 future federal reserve choices, or even the person he will choose, and have them talk about cutting rates as comfort to the economy since they know Powell will be fired as soon as possible.

The big fight now is for the survival of the West, liberty, Judeo-Christian values and capitalism. If China wins, all of the aforementioned are lost. The last element you need is politicized agencies who are supposed to be independent but aren't really.

U.S. Fed cuts its key rate by 50 basis points in dramatic shift - National | Globalnews.ca

The U.S. Federal Reserve delivered an oversized interest rate cut of 50 basis points, reflecting confidence in taming inflation but concern over the economy.

globalnews.ca

The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates helped tame inflation but that also made borrowing painfully expensive for American consumers.

The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing. Coming just weeks before the presidential election, the Fed’s move also has the potential to scramble the economic landscape just as Americans prepare to vote.

The central bank’s action lowered its key rate to roughly 4.8%, down from a two-decade high of 5.3%, where it had stood for 14 months as it struggled to curb the worst inflation streak in four decades. Inflation has tumbled from a peak of 9.1% in mid-2022 to a three-year low of 2.5% in August, not far above the Fed’s 2% target.

Why are you talking about events that happened in 2024 as if they are current?

The article you link to is dated Sept 2024.

 

[itfitzme]

Generally, when inflation is high, it is because supply is low and demand is high, and the Fed raises rates to slow the purchases (demand) while the supply of 'whatever' is low, which works to reduce inflation rates.
Borrowing rates drop, when inflation rate goes down, is my understanding???

Here is the issue I have. The OP is talking about an article dated Sept of 2024. This did not currently happen. It is not current reality.

 

[shockedcanadian]

Why are you talking about events that happened in 2024 as if they are current?

The article you link to is dated Sept 2024.

Because it is relevant today. He decreased rates before the election to assist Harris. Meanwhile, when it is REALLY time to decrease since the economy is sputtering (due to government cuts) and inflation is low, also, at a time in which America is negotiating critical trade deals...he is silent.

Now is exactly the time in which he should decrease rates to support America. Does he work for Americas economic interests or not? He politicized this by talking about tariffs. Who gives a damn about tariffs, that's not his lane, he's not a trade minister and the data wouldn't be known for months if not longer.

His role should be to see that inflation is low but government size has been cut, and, the U.S are renegotiating debt and trade deals. Now is the time to cut, not when he did in Septermnber.

He's a partisan or not very good at his job,

 

[Care4all]

There are multiple moving parts and facts which is what makes economics interesting to me. Interest rates have multiple purposes including stimulating a slow or overheated economy etc or offsetting other government decisions.

For the purposes of this interest rate decision that he made, basically inflation is due to the high excessive supply of money in the economy and increasing rates would make it less desirable to borrow and thus, decrease the supply.

In turn, lowering the interest rates as he did, 50 basis points at that; would encourage borrowing and hence increase the money supply. This in turn would continue to increase prices at a time when prices were already high.

He did so against any logic as inflation was high so he should not have made this decision, it defied logjc. So, from what I can tell his intention was to encourage more borrowing and increased investment to overheat the economy right as the election was occurring so that citizens would artificially believe the economy was booming, helping Harris.

It didn't work clearly as Trump won, but the decrease in rates was a real head scratcher and it made getting inflation under control even more difficult.

The irony of all this is though that it gives Trump even more leeway since a slowing down of an overleveraged economy would be good for citizens since it steadies inflation.

In my opinion, Powell is either a partisan or a really bad economist.
T

No....you've got it mixed up when you said this....

"For the purposes of this interest rate decision that he made, basically inflation is due to the high excessive supply of money in the economy and increasing rates would make it less desirable to borrow and thus, decrease the supply."


Higher interest rates does not reduce the supply of money, it reduces the demand for the money (in the supply), it reduces borrowing with the high interest rates and thus the demand is reduced....

 

[itfitzme]

Because it is relevant today. He decreased rates before the election to assist Harris. Meanwhile, when it is REALLY time to decrease since the economy is sputtering (due to government cuts) and inflation is low, also, at a time in which America is negotiating critical trade deals...he is silent.

Now is exactly the time in which he should decrease rates to support America. Does he work for Americas economic interests or not? He politicized this by talking about tariffs. Who gives a damn about tariffs, that's not his lane, he's not a trade minister and the data wouldn't be known for months if not longer.

His role should be to see that inflation is low but government size has been cut, and, the U.S are renegotiating debt and trade deals. Now is the time to cut, not when he did in Septermnber.

He's a partisan or not very good at his job,

Straight of the box, I can tell that you are partisan and not able to carry on a coherent discussion of positive economics. Your OP is replete with red flags, not the least of which is the inability to distinguish between past and present tense.

 

[shockedcanadian]

No....you've got it mixed up when you said this....

"For the purposes of this interest rate decision that he made, basically inflation is due to the high excessive supply of money in the economy and increasing rates would make it less desirable to borrow and thus, decrease the supply."


Higher interest rates does not reduce the supply of money, it reduces the demand for the money (in the supply), it reduces borrowing with the high interest rates and thus the demand is reduced....

Higher interest rates would encourage less borrowing. Hence, less money circulating in the economy. Lower rates, which he chose when dropping them 50 basis points before the election went against wisdom since inflation was the issue.

 

[shockedcanadian]

Straight of the box, I can tell that you are partisan and not able to carry on a coherent discussion of positive economics. Your OP is replete with red flags, not the least of which is the inability to distinguish between past and present tense.

People like yourself are why China and the MSS keep winning. Carry on

 

[itfitzme]

People like yourself are why China and the MSS keep winning. Carry on

Who are you talking about? You don't know me. I'm just saying, in reading your OP, you are unclear about past and present tense. It made your OP unreadable. There is no discussion about anything because it not clear what your reasoning is and that because even more apparent as you went into a partisan tirade over how bad you think Powell is. Personally, I was just looking for an interesting discussion only to find you claiming the the Fed just cut interests rates on Wednesday. This is your statement "The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point". I don't seem to be able to find that it the news but it does appear to perhaps be referencing 2024. What does any of that have to do with China?

 

[shockedcanadian]

Who are you talking about? You don't know me. I'm just saying, in reading your OP, you are unclear about past and present tense. It made your OP unreadable. There is no discussion about anything because it not clear what your reasoning is and that because even more apparent as you went into a partisan tirade over how bad you think Powell is. Personally, I was just looking for an interesting discussion only to find you claiming the the Fed just cut interests rates on Wednesday. This is your statement "The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point". I don't seem to be able to find that it the news but it does appear to perhaps be referencing 2024. What does any of that have to do with China?

I copy and pasted the details of the article. I stated in the headline that this was before the 2024 election.

Perhaps you just need to eat some carbs or something.

 

[Care4all]

Because it is relevant today. He decreased rates before the election to assist Harris. Meanwhile, when it is REALLY time to decrease since the economy is sputtering (due to government cuts) and inflation is low, also, at a time in which America is negotiating critical trade deals...he is silent.

Now is exactly the time in which he should decrease rates to support America. Does he work for Americas economic interests or not? He politicized this by talking about tariffs. Who gives a damn about tariffs, that's not his lane, he's not a trade minister and the data wouldn't be known for months if not longer.

His role should be to see that inflation is low but government size has been cut, and, the U.S are renegotiating debt and trade deals. Now is the time to cut, not when he did in Septermnber.

He's a partisan or not very good at his job,

It is a very hard job and political party is not involved. Trump trying to inject that he could and should control what the fed does...DESTABLIZES the market...THAT IS WHY IT FELL whenever Trump talked that way.....

He lowered the fed rate under Biden because the inflation rate had fallen from a high of a 9% inflation rate to a low of a 2.5% rate, and the economy showed signs of slowing.

Trump's tariffs ARE MOST CERTAINLY involved with his decision to not lower rates....which would increase sales, shrink the supply....a supply that is going to be reduced already with the high cost of tariffs, and inflation is going to rise at a very fast rate....

adding to that, by making money borrowing cheap so they can buy up even more of the reduced supply, is suicidal....inflationary!

 

[Care4all]

Higher interest rates would encourage less borrowing. Hence, less money circulating in the economy. Lower rates, which he chose when dropping them 50 basis points before the election went against wisdom since inflation was the issue.

Less borrowing, is less DEMAND for borrowing.... Less demand for borrowing money, will eventually increase the ratio of the on hand inventory of the money to be loaned (supply) vs. the demand for the money to be borrowed.....is my understanding?

 

[Care4all]

Higher interest rates would encourage less borrowing. Hence, less money circulating in the economy. Lower rates, which he chose when dropping them 50 basis points before the election went against wisdom since inflation was the issue.

Less borrowing, is less DEMAND for borrowing.... Less demand for borrowing money, will eventually increase the ratio of the on hand inventory of the money to be loaned (supply) vs. the demand for the money to be borrowed.....is my understanding?

 

[itfitzme]

I copy and pasted the details of the article. I stated in the headline that this was before the 2024 election.

Perhaps you just need to eat some carbs or something.

Yes, after rereading what you wrote it became apparent that you had copied and pasted without quotations. So it read as if it just happened and as if you were writing it. Try stating that you are quoting.

BTW, I now know that your point is because Trump came out on Monday wanting to fire Powell. It tanked the stock market and now he's claiming he didn't say that. I also note that my simply asking why you were talking about something from 2024 caused you to go off into a partisan rant.

You are not capable of having an objective discussion about economics.