Following two rate cuts this year, as the Trump economy begins surging, the Federal Reserve has remained standoffish on more cuts coming. That despite positive jobs reports and inflation reports that signify in any other reality that a rate cut is not just a possibility, it is a necessity. But the Fed is still doing Fed things, acting benighted and playing politics at the expense of the American people.
The Federal Reserve Bank of Boston President Susan Collins said this week she sees "no urgency" for a December rate cut. She added the two rate cuts this year have left the central bank in a position tilted toward combating inflation, which has been dropping regardless, albeit slightly. But even with good data on the side of a cut, the Fed appears to be playing politics once again.
Economist E.J. Antoni says this opinion is born out of politicking, with a dash of hypocrisy.
"If you look at the very people today saying we do not need a rate cut...they are the same people who a year ago, with much less significant data, were advocating for a rate cut," he says.
Back one year ago was possibly the worst time to try a rate cut. The disaster of an economy run by President Biden left interest rates and inflation in ruins, and cutting rates at that point would have been detrimental to the economy. There were drastically inflated jobs reports to boot, falsely propping up a floundering economy.
Yet beat the rate cut drum they did, all with the purpose once again of playing politics to keep Trump from succeeding.
"Last year, it was an attempt by the Fed to get their candidate across the finish line, which obviously did not work," Antoni says. "This year, they are just throwing up roadblocks...doing whatever they can to stymie Trump's economy...that has been very clear when you look at the data."
Most traders bets have been bullish on a potential rate cut in December, and it is too soon to really tell if one is in the offing. But part of the problem is the Fed itself.
They are essentially hitting the gas and the brakes at the same time. The Fed's balance sheet still remains out of control, rife with overspending. So, we would actually be better off without the Fed dictating terms.
"We would be much better served if the Fed allowed the market to set the interest rate...instead of a central authority," says Antoni.
He says we will not have an idea if a rate cut is on the table for a while. But given how Fed Chair Jerome Powell has acted with President Trump, akin to a four-year-old throwing a temper tantrum, do not get your hopes too high.
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