The only question is how much the Fed will ultimately cut rates by to do so, which can prove to be a tricky balance. Lowering rates would help the economy by making it easier for US businesses and households to borrow. But it could also offer more fuel for inflation.
The Fed released forecasts that said its median official expects to cut the federal funds rate by another half of a percentage point through the end of the year. That could mean a traditional-sized cut of a quarter of a percentage point at each of its two remaining meetings scheduled for 2024.
Wall Street retreated into the close.Credit: AP
After that, the median Fed official is projecting another full percentage point of cuts during 2025.
Some critics say the Federal Reserve may have already kept interest rates too high for too long, doing damage to the economy.
“When the Fed is behind the curve, it sometimes takes a big move to catch up to where they should have been all along,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“We don’t think we’re behind,” Powell said in a press conference following the Fed’s announcement. “We think this is timely. But I think you can take this as a sign of our commitment not to get behind,” pointing to Wednesday’s hefty cut of half a percentage point. Powell called it a “good strong start to this.”
Other critics, meanwhile, say the Fed will need to be careful about cutting rates too much because of the possibility that inflation will remain stubbornly higher than it’s been in recent decades.
Powell repeated several times that the Fed does not feel “a rush to get this done” and will make its decisions on interest rates at each successive meeting, depending on what incoming data say.
“We’ll move as fast or as slow as we think is appropriate in real time,” he said. For now, he said, “the US economy is in a good place, and our decision today is designed to keep it there.”
Intuitive Machines soared 38.3 per cent after NASA awarded it with a contract worth up to $US4.82 billion ($7.1 billion) for communication and navigation services the space agency will use to establish a long-term presence on the moon.
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Trading in Tupperware Brands remains halted after the company filed for Chapter 11 bankruptcy protection. Its stock has been sinking, down to 51 cents, since a mini-revival early in the pandemic sent its stock above $US30.
McGrath RentCorp, a company that rents and sells mobile office trailers, portable classrooms and other structures, fell 3.1 per cent after it agreed to terminate its proposed buyout by WillScot following tough scrutiny of the deal from US regulators.
The Bank of Japan and the Bank of England are also holding monetary policy meetings later this week. Neither central bank is expected to move on rates, though the language of what the officials say could be an indicator of later moves and still influence markets.
AP
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