• Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock
Stock

Fed holds interest rates but keeps door open to a cut in coming months

by August 1, 2024
written by August 1, 2024

Federal Reserve officials said Wednesday that while there are signs the economy is slowing, the Fed was not yet ready to cut its key interest rate.

Yet even as it held rates at their current level of about 5.5%, the Federal Open Market Committee’s latest statement included changes in language that acknowledged growing signs of economic weakness that suggest a greater willingness to consider lowering borrowing costs.

Notably, the FOMC observed some deterioration in labor-market conditions.

“Job gains have moderated, and the unemployment rate has moved up but remains low,” it said in the statement Wednesday.

At 4.1%, the unemployment rate is at its highest level since February 2018, though still below levels that would suggest a recession.

On Tuesday, the Bureau of Labor Statistics reported that while layoff activity remained subdued in June, the hiring rate in the economy has slowed to a level not seen since 2014. The percentage of unemployed workers who have gone without roles for 27 weeks or more has recently begun to surge, with about 1.5 million total workers now in that category.

Yet the FOMC said Wednesday it would not budge “until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” a line Fed officials have repeated previously. 

In a note to clients after the statement was released, Omair Sharif, founder and president of the Inflation Insights research group, said the Fed had taken a ‘baby step’ toward a cut that traders have bet will come in September.

‘I expect that further good news on the inflation front in July should set up the Chair to deliver a more meaningful signal that a rate cut in September is very likely,’ Sharif wrote.

Likewise, Seema Shah, chief global strategist at Principal Asset Management financial group, said the statement ‘cracks the door open to the September cut that everyone is expecting.’

In remarks following the statement’s release Fed Chair Jerome Powell acknowledged a rate cut ‘could be on the table for September’ but said monetary policymakers ‘just need to see more good data.’

In recent testimony to Congress, Powell acknowledged that central bank officials had started the clock on lowering rates, saying acting “too late or too little could unduly weaken economic activity and employment.”

The Federal Reserve helps set the interest rates that determine how much it costs consumers and businesses to borrow money for products and services.

For the past two years, it has sought to fight inflation by keeping interest rates elevated, in essence fighting fire with fire: By making borrowing more expensive, it has cooled demand in the economy and thus slowed the rate at which prices have increased.

Now, the Fed is signaling that the higher rates have done their job on the inflation front — and that keeping them aflame could lead to unnecessary damage to the rest of the economy.

Wall Street traders have signaled for weeks that a September rate cut is a virtual certainty, according to data from the financial services company CME Group.

But influential former Fed officials have begun calling for a more rapid timeline. Bill Dudley, a former New York Federal Reserve president, wrote this month that a rate cut should occur before September. In a Bloomberg News op-ed, Dudley said he had ‘changed his mind,’ with unemployment creeping higher and with all but the wealthiest households having depleted their immediate post-pandemic financial cushions.

‘Although it might already be too late to fend off a recession by cutting rates, dawdling now unnecessarily increases the risk,’ Dudley wrote.

This week, Alan Blinder, a Fed vice chair in the Clinton administration, said in a Wall Street Journal op-ed that the time to cut is now.

‘Why wait?’ Blinder asked, declaring the two-year fight against pandemic-induced inflation over as ‘the economy seems to be simmering down.’

Cutting rates would only be a matter of heading off a negative economic outcome: Companies have signaled that there’s upside, too.

Sectors whose success is especially sensitive to interest rates and consumer credit, like the housing and automotive markets, have shown particular weakness — including signals from companies in those industries that they expect sales to ramp up again once interest rates begin to fall.

“There is now a higher probability of interest rate relief beginning in September,” said Dave Foulkes, CEO of Brunswick Corp., a boat-making specialist. While new cuts would most likely have only a minor impact on 2024 results because peak season will have passed, they’d be “a potential tailwind for 2025.”

The Fed will announce the results of the Open Market Committee meeting at 2 p.m. Wednesday.

This post appeared first on NBC NEWS
0 comment
0
FacebookTwitterPinterestEmail

previous post
US stocks tumble amid weak economic data: What went wrong?
next post
CarShield ordered to pay $10 million federal settlement over deceptive repair coverage ads

related articles

YouTube to pay $24 million to settle Trump...

October 1, 2025

Charlie Javice sentenced to 7 years in prison...

October 1, 2025

Video game maker Electronic Arts to be acquired...

October 1, 2025

Nearly 200,000 BMWs recalled over potential fire risk

September 30, 2025

Trump says U.S. will impose new tariffs on...

September 29, 2025

Former Fed chairs warn that removing Lisa Cook...

September 27, 2025

Amazon to pay $2.5 billion to settle FTC...

September 27, 2025

The charm of watching movies in theaters is...

September 25, 2025

Ben & Jerry’s co-founder resigns, claiming parent company...

September 18, 2025

LimeWire acquires Fyre Festival, asking ‘What Could Possibly...

September 17, 2025
Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest News

  • UAW, U.S. dealers increase criticism of Stellantis CEO over cuts, sales declines

    September 13, 2024
  • Trump signs agreements with Qatar on defense and Boeing purchases

    May 14, 2025
  • Trump calls for Obama to be criminally investigated, says he was Russiagate ‘ringleader’

    July 22, 2025
  • SCOOP: Top Republican Chuck Grassley sets prompt hearing on judges blocking Trump

    March 26, 2025
  • U.S. farm agency allows six more states to bar some items from food aid

    August 5, 2025

Popular Posts

  • 1

    Secret Service admits leaning on ‘state and local partners’ after claim it ignored Trump team’s past requests

    July 21, 2024
  • 2

    Five more House Democrats call on Biden to drop out, third US senator

    July 19, 2024
  • 3

    Elon and Vivek should tackle US funding for this boondoogle organization and score a multimillion dollar win

    December 4, 2024
  • 4

    Forex Profit Calculator: Maximize Your Trading Potential

    July 10, 2024
  • 5

    Biden calls to ‘lower the temperature’ then bashes Trump in NAACP speech

    July 17, 2024

Categories

  • Economy (829)
  • Editor's Pick (6,247)
  • Investing (634)
  • Stock (935)

Latest Posts

  • Trump admin breaking modern presidential staffing records, hiring ‘thousands of America First warriors’

    March 31, 2025
  • Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

    August 9, 2024
  • CDC Director Susan Monarez refuses to be fired as other officials call it quits

    August 28, 2025

Recent Posts

  • Trump plans to plead not guilty to Jack Smith’s revised federal election interference charges

    September 4, 2024
  • ‘Let us be the parents’: Supreme Court should let parents opt kids out of LGBTQ school lessons, lawyer argues

    April 22, 2025
  • Trump claims Biden pardons are ‘VOID,’ alleging they were signed via autopen

    March 17, 2025

Editor’s Pick

  • Tearful chair of Munich Security Conference expresses ‘fear’ in farewell address after blistering Vance speech

    February 17, 2025
  • Trump’s picks so far: Here’s who will be advising the new president

    November 12, 2024
  • DOD closes think tank arm marred by ‘inefficiency’ and criticized by GOP for ties to Trump-Russia probe

    March 14, 2025
  • About us
  • Contacts
  • Privacy Policy
  • Terms & Conditions

Disclaimer: moneyrisetoday.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2025 moneyrisetoday.com | All Rights Reserved

Money Rise Today – Investing and Stock News
  • Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock