The toughest job in America today is the one held by the Chairman of the Fed. He will have some incredibly tough decisions to make starting late this Fall.

Tariffs raise prices. It's a fact. Add to it a slowing economy, a standstill job market, millions expected to lose health benefits in late 2026, an aging population accompanied by a massive drop in immigration, what do you do if you are J POW? And if the delusional tech heavy S&P comes back to earth we have big challenges ahead.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Agree, although he will of course have to include political analysis in what he does. He has to thread the needle he has been threading so far of doing the right thing while also keeping himself in the job through next June. If someone like Hassett is the next Chair, we are well and truly f---ed.

This is not directly related to this thread but I have been surprised by the fact the folks doing the biggest damage to our economy in this administration graduated from the colleges (Yale, Harvard, etc) that many of us want our kids to attend. What is it about their training from these universities that they make them mean, greedy, indifferent to the have nots etc ?

Anonymous wrote:

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Agree, although he will of course have to include political analysis in what he does. He has to thread the needle he has been threading so far of doing the right thing while also keeping himself in the job through next June. If someone like Hassett is the next Chair, we are well and truly f---ed.

Anonymous wrote:

Anonymous wrote:The Fed may have to actually raise rates to combat inflation.

Economists have said over and over just wait in the months to come we will eventually see price increase.

The problem is that some of his supporters believe in magic. Even if factories are relocated here, any hiring surge will be temporary because they will be smart and automated factories. In China, the number of people employed in manufacturing has been steadily declining due to automation.

+1 to the bolded, although I worry they won't have the spine to do it.
In December 2024 we were coming in for a soft landing and if things had continued in that manner we might or might not have lower rates by now. But the tariffs, tax cuts for the wealthy, etc are working counter to the Fed and making their job harder.

It's gonna be really wild looking back. Basically the economy was somewhat improbably getting into goldilocks territory, despite some pretty tough challenges. Like you said, soft landing, imagine a plane coming in too fast, that the pilot does a good job smoothing out, and now the copilot took over and basically pushed the plane into a nose dive.

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Anonymous wrote:The Fed may have to actually raise rates to combat inflation.

Economists have said over and over just wait in the months to come we will eventually see price increase.

The problem is that some of his supporters believe in magic. Even if factories are relocated here, any hiring surge will be temporary because they will be smart and automated factories. In China, the number of people employed in manufacturing has been steadily declining due to automation.

+1 to the bolded, although I worry they won't have the spine to do it.
In December 2024 we were coming in for a soft landing and if things had continued in that manner we might or might not have lower rates by now. But the tariffs, tax cuts for the wealthy, etc are working counter to the Fed and making their job harder.

Anonymous wrote:this is one of the reasons behind Feds hesitance to cut rates at this point

They also only have control over short term rates. And those aren't what drive most interest rates that consumers see, mortgages, etc.

The Fed may have to actually raise rates to combat inflation.

Economists have said over and over just wait in the months to come we will eventually see price increase.

The problem is that some of his supporters believe in magic. Even if factories are relocated here, any hiring surge will be temporary because they will be smart and automated factories. In China, the number of people employed in manufacturing has been steadily declining due to automation.

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

The US economy is entirely driven by consumer spending. If we stop spending, you will see accelerated layoffs.

this is one of the reasons behind Feds hesitance to cut rates at this point

Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I mean you can if you want stagflation.

It'd be a very bad idea. Tariff-driven inflation has just begun to set in. Cutting rates would just accelerate rising prices.

You can, but, ceteris paribus, it will increase inflationary pressures.

Armchair economists, can(or should you) you cut rate with rising prices?