The Case For Interest Rate Cuts Growing As Fed Meets Tuesday

Interest rates have been steadily falling in recent months but sat at all-time highs for quite a while during the Biden Administration. Rampant inflation brought on by weak economic policies caused some of the highest rates in over 30 years to come about, and now the Federal Reserve is working to bring things back into an orbit of comfortability.

The Fed will have their meeting on Tuesday to once again see if interest rate cuts will be on the table. The case for doing so has been growing since President Trump took office, and it has only been growing in the last month. Inflation remains low, despite doom and gloom from economists over tariffs. But there is more at play.

Greg Ip of the Wall Street Journal says this argument for rate cuts goes beyond just low inflation rates.

"At the same time, we are seeing clues in the data that the labor market seems to be getting weaker...which increases the case for lowering interest rates at some point," he says.

Whether the Fed will act or not on Tuesday is anyone's guess. They are not required too, and Fed Chair Jerome Powell has not spoken on the issue in the interim. So, Tuesday will tell a lot about where he feels we are, and whether a rate cut is in the cards.

"You might hear him start to talk in a way that suggests their assessment of risks is shifting," says Ip. "From worrying from inflation to worrying about employment...and if that is the case, I would see a rate cut maybe in July...if not in July, then in September."

There is no real reason why the labor market has weakened and could be a variety of different things. Fear over tariffs, overhead costs, any number of things could be impacting the numbers. But in all, it is a good marker for a lowering of interest rates, which in turn, is good for Americans.

By and large, the Fed has managed to stay clear of the shifting sands of politics. Again, for the most part, they have remained above all the political maneuvering and have remained focused on making things profitable for people again. They are likely to do the same again.

"They will try to shut out the noise...and focus first and foremost on the data, and what it tells them about their ability to meet their mandate to Americans," Ip says.

The Fed meets on Tuesday to review the possibility. The case is there though for a cut, regardless of how small it is.