Is the Federal Reserve Running Out of Reasons To Cut Interest Rates?
$SPDR S&P 500 ETF (SPY.US)$ $S&P 500 Index (.SPX.US)$ Federal Reserve officials are widely expected to cut the central bank's key interest rate next week even as some measures of inflation are still well above the Fed's goal of a 2% annual rate.
However, stubborn inflation could make rate cuts fewer and farther between next year.
Fed officials are trying to balance the need to cool inflation against the risk of sparking a wave of layoffs, as the labor market has gotten tougher for job seekers in recent months.
However, stubborn inflation could make rate cuts fewer and farther between next year.
Fed officials are trying to balance the need to cool inflation against the risk of sparking a wave of layoffs, as the labor market has gotten tougher for job seekers in recent months.
Complicating the outlook is the uncertainty about the extent to which incoming president Donald Trump will raise import taxes, as he recently threatened to do. Broad tariffs on foreign goods could stoke inflation and derail the Fed's plans to gradually lower the fed funds rate to the neighborhood of 3%, the range that officials see as "neutral," neither stimulating the economy nor hindering it.
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