Economics

466 readers

271 users here now

founded 2 years ago

Inflation is slowing, but the Fed now faces a tough choice on when to cut rates (www.nbcnews.com)

submitted 5 months ago by MicroWave to c/economics

3 comments fedilink hide all child comments

The Federal Reserve now finds itself in a bind as to whether to cut rates soon or leave them elevated to further slow inflation.

Amid signs of a weakening labor market, the Federal Reserve now finds itself in a bind: If it cuts interest rates too soon, it could risk reigniting the price increases that have bedeviled the post-pandemic economy. But if it keeps rates elevated, the job security of millions of Americans could be further jeopardized.

The Consumer Price Index for the month of June, due to be released by the Bureau of Labor Statistics this morning at 8:30 a.m., is expected to offer further insight into the Fed's potential next moves.

The unemployment rate now stands at 4.1%, its highest point of the post-pandemic period and a level not seen since February 2018, excluding the coronavirus unemployment surge in 2020.

top 3 comments

sorted by: hot top controversial new old

[–] whyrat 6 points 5 months ago* (last edited 5 months ago)

I remember when 5% unemployment was considered the target. And that we spent around a decade below the 2% inflation target.

The remaining inflation driver has been housing, which is experiencing structural issues, not necessarily what you want to try and fix with interest rates...

It's wild to me that the current employment and inflation numbers would be some of the best if we had them before 2000 but are being portayed here as recession indicators.

Waiting on the CPI release today...

Edit: CPI release was negative in June, Crazy! I guess the Fed can maybe cut rates if they wanted to... personally I think getting the 12-month CPI under 2.5% first would be appropriate.

https://finance.yahoo.com/news/inflation-falls-in-june-for-first-time-since-2020-as-consumer-price-increases-continue-to-slow-123243293.html

[–] verdantbanana 3 points 5 months ago* (last edited 5 months ago)

a lot of the jobs no one can afford to work

the monthly cost of just housing and food alone is instantly more than what employers are paying out

$7.25 an hour is still the federal minimum wage despite the fact that people voted for Biden

starting pay since the pandemic has dropped as well to $13 an hour or lower at most places

eventually no one will be able to afford to work grocery, restaurant, oil change places, or any of the vital service industries

already the reality in most of the US

[–] Yewb -1 points 5 months ago

The fed is trapped and cannot cut the interest rates... they can cut rates and get hyperinflation or not cut rates and get semi hyper inflation.

One scenario they get the blame for the crash, the other they dont, I would guess rates will stay flat or increase only.