Despite Inflation Still Raging, Fed Chairman Powell Slashes Interest Rates by a Big Half Point

He has given up on fighting inflation, and in fact is now putting us on the path for more inflation, to forestall the Biden-Harris Recession by a couple of months until we're safely past the election.

As I always say, cutting interest rates puts more money into the economy, which further devalues our already-devalued dollars. It is inherently inflationary. The market is already flooded with cheap dollars, reducing the value of all of them. This floods the market with more cheap dollars, reducing their value still further.

The only way this can be justified is that if there's a big recession on the way that is even worse than runaway inflation.

But Powell won't admit that's the case. That would damage the Biden-Harris lie that the economy is booming, baby!

The other way this can be justified is if you're a Deep State Democrat looking to rig another election.

Looks like the Federal Reserve doesn't like the latest jobs reports any better than others do -- at least others outside the White House. In an 11-1 vote, the Fed cut its lending rate by 50 basis points rather than the usual 25, pushing it back down to between 4.45-5.0%. That matches up with expectations over the last few days by economists hoping that the Fed would take more aggressive action to prevent a collapse in job creation. Advertisement

This won't be the last action from the Fed this year, and we could see another full 100 basis points cut before next summer:

[WSJ:]

Eleven of 12 Fed voters backed the cut, which will bring the benchmark federal-funds rate to a range between 4.75% and 5%. Quarterly projections released Wednesday showed a narrow majority of officials penciled in cuts that would lower rates by at least a quarter point each at meetings in November and December.

Fed Chair Jerome Powell's decision to trim rates by a larger amount than most analysts anticipated until just a few days ago moved the central bank unwaveringly into a new phase of its inflation battle: It is now trying to prevent past rate increases, which last year took borrowing costs to a two-decade high, from further weakening the U.S. labor market.

"The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the Fed said in its policy statement Wednesday. The rate cut reflected both "the progress on inflation and the balance of risks."

Update: The ignorant DEI hire Kamala Harris claims that flooding the market with even more cheap dollars is anti-inflationary.

The US Federal Reserve cut its key lending rate by half a percentage-point Wednesday in its first reduction since the Covid pandemic, sharply lowering borrowing costs just before November's presidential election.

The Fed's decision will affect the rates at which commercial banks lend to consumers and businesses, bringing down the cost of borrowing on everything from mortgages to credit cards.

Democratic presidential candidate Kamala Harris praised the move while emphasizing her commitment to fighting inflation.

"While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down," the Vice President said in a statement.

Interest rate hikes wring some cheap dollars out of the economy, thus making each remaining dollar worth more, thus reducing inflation. Interest rate cuts do the exact opposite.

But she majored in Sucking Dick of Her Boss. What do you expect of her?

posted by Ace at 04:41 PM

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