A Fed rate cut is finally within view
livemint.comWhile Federal Reserve officials aren’t likely to change interest rates in the coming week, their meeting will nonetheless be one of the most consequential in a while. At each of their four meetings this year, interest-rate cuts have been a question for later. This time, though, inflation and labor-market developments should allow officials to signal a cut is very possible at their next meeting, in September.
As a result, the coming week’s meeting, which wraps up Wednesday, could resolve the trade-off Chair Jerome Powell has been weighing between the risks of cutting rates too soon and waiting too long, in favor of acting sooner. One reason officials aren’t likely to deliver a cut this time despite the growing case for one is that it would likely be the first reduction in a sequence to recalibrate rates lower. Officials have been surprised by inflation in the past and want more evidence it is truly cooling before crossing the rate-cut threshold.
Nonetheless, officials have grown more wary of waiting too long and blowing a soft landing. Bringing inflation down to the Fed’s 2% goal while maintaining a healthy labor market “is the No. 1 thing that just does keep me awake at night," Powell told lawmakers this month.
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