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🔍 Federal Reserve Maintains Interest Rates Amid Slight Decline in Inflation 📉 Today, the Federal Reserve announced it will keep interest rates unchanged, following a minor decline in inflation from 3.5% to 3.4%. FED Chairman Jerome Powell highlighted that the current inflationary gains are not sufficient to justify a rate cut. 🔮 Market Predictions and Economic Outlook 🔮 The CME Group projects a 91.1% chance of interest rates remaining steady in the next FED meeting on July 31, 2024. September market predictions suggest a 58.2% chance of a 25 basis points rate cut. 📊 Historical Context and Investor Strategy 📊 Historically, today’s interest rates are not abnormally high, with the 10-year treasury rate averaging around 4.4%. High rates can be opportunities for seasoned investors who focus on solid investments and sound business practices. 💼 Investor Sentiment and Market Performance 💼 The S&P 500’s recent performance highlights the importance of considering risk-free investment options, especially in a high-rate environment. 🔍 Economic Projections 🔍 Market consensus leans towards potential rate cuts if economic conditions warrant it. Investors should focus on long-term strategies and remain adaptable. Want to learn more about investments? 🌟 Join UP Education Now 🌟 to transform your investment mindset! 📢 Read the full article on our website! 📢 https://lnkd.in/gzd3geU7 #Investment #FederalReserve #Economy #InterestRates #Inflation #Finance #UPEducationNow #MarketTrends #InvestorMindset #EconomicOutlook

The conundrum of months to end soon ! With the federal funds rate at a 23-year high of 5.25% to 5.50%, the Federal Reserve faces a key decision at its September 18 meeting: a 25 or 50 basis point (bps) rate cut. A 25 bps cut would reflect a cautious, gradual approach to economic stimulus, while a 50 bps cut would signal pre-emptive accommodation in response to recent labor market weakness. This larger cut could boost liquidity and growth in sectors like investments, consumer goods, and housing but also increase inflation risks if demand rebounds too quickly. The chart below illustrates the historical parallels between past rate cut scenarios in 1995, 2001, and 2007, comparing them to the situation in September 2024. In 1995, inflation remained controlled as the Federal Reserve implemented smaller rate cuts, leading to a successful soft landing for the economy. Historically, larger cuts, as seen in 2001 and 2007, were linked to severe financial crises. In contrast, the 2024 rate cut scenario aims to cool inflation while avoiding significant job losses, thereby steering clear of an economic downturn like the one in 2007. Whether it’s a 25 or 50 bps cut, the Federal Reserve’s goal is a soft landing. But the path is anything but simple, and the stakes couldn’t be higher. #macroeconomics #federalreserve #ratecuts #softlanding

Summary of Key Points on Federal Reserve's Interest Rate Decision Interest Rates Steady: The Federal Reserve has decided to keep interest rates unchanged for now, waiting for more progress on inflation before any further cuts. 📊 Future Rate Expectations: The CME Group indicates a 93.5% probability of a 25 basis point cut in September, with a 6.4% chance of a 50 basis point cut. 📉 Impact on Investments: Long-term investment strategies should remain unaffected by short-term rate changes. Focus on buying strong companies at reasonable prices. 💼 Real Estate Trends: Despite rising interest rates, home prices continue to reach new all-time highs. Historical data shows that inflation can drive up home values even when rates increase. 🏡 Economic Indicators: Unemployment is at 4.1%, and core inflation has decreased to 2.5%. Job growth remains positive, albeit slower. 📈 Investment Philosophy: Emphasize long-term gains over short-term market noise. Sound investment principles will yield success over time. 💡 For more detailed news and updates, check out the UP-Education website. https://lnkd.in/g7XS4dZc #FederalReserve #InterestRates #Investing #Economy #RealEstate #MarketTrends #FinanceNews #LongTermInvesting 💹💼🏡📊

#economics #unitedstates #federalreserve #NobelPrize Two currents in the U.S. economy are facing the Fed as it prepares for its rate setting meeting: The first current is the American people. 1. The American people The volatile food inflation as economists say has stabilized at a higher persistent mean, meaning the average food price was lower, in the last 4 years they jumped, and now that line in the chart representing the average food prices is at a higher but steady level. What is really going on here then? If I am the average bottom 90% income earner in the U.S. income distribution, my wages did not go up at the same rate as the prices of the essentials. Meaning, my monthly budget for my essentials as a percentage of my income jumped to a higher level. If it was x% of my income, it is now (x+5)% of my higher income for which I am working harder but not for that much higher income. Psychologically, I feel inflation is higher even though the prices of essentials are no longer rising as they did in the last 4 years because I am working harder to pay my bills and my wages are not that much higher, and the Fed’s communications are not speaking to the American people giving them confidence, defensive about the public and political beating the Fed is taking. What should happen? There is nothing much the Fed can do other than tell employers to pay higher wages without jacking up prices to prevent getting into a wage-price spiral and higher inflation as a result so that the ratio of spending on essentials to income returns to how it used to be before COVID and the wars. This is something American companies can easily do without the price controls of Kamala Harris/Tim Walz. © 2024 https://www.tamirisa.com TAMIRISA

Federal Reserve Faces Pressure Over Interest Rate Decision In a scenario reminiscent of a tightrope walk, the U.S. Federal Reserve faces a critical decision as it navigates the choppy waters of the current economic landscape. As of August 2024, the central bank is caught between the proverbial rock and a hard place, balancing the conflicting imperatives of curbing inflation and stimulating economic growth. This intricate balancing act comes amid signs of an economic slowdown, an uptick in unemployment, and persistent inflationary pressures. The unemployment rate has recently risen, accompanied by slower hiring, indicating a deceleration in economic activity. The Fed's dual mandate—maximum employment and stable prices—compels it to consider cutting interest rates to foster economic growth. Lower rates could reduce borrowing costs, encourage spending and investment, and support job creation. However, inflation remains above the Fed's 2% target, with the Consumer Price Index (CPI) showing a 3% year-over-year increase in June 2024, down from 9.1% in June 2022. This persistent inflation complicates the decision, as rate cuts could potentially exacerbate price pressures. Adding to the complexity is the Phillips Curve, which traditionally suggests an inverse relationship between unemployment and inflation. Recent trends, however, show a flattening of this curve, implying that changes in unemployment have had a limited impact on inflation. This anomaly provides a narrow window for the Fed to consider rate cuts without significantly stoking inflation, though the risk remains if inflationary pressures are driven by supply-side factors like supply chain disruptions or rising energy prices. Thank you Alejandra López for your submission!

When the Federal Reserve has cut interest rates in the past, U.S. economic activity has tended to recede in the periods following. However, we believe U.S. economic conditions remain solid and the intermediate-term odds of a recession remain low. https://bit.ly/40oTmJ2

Federal Reserve Chair Jerome Powell signaled Monday that more interest rate cuts are in the pipeline, though their size and speed will depend on the evolution of the economy. Wall Street investors and economists are weighing whether the Fed will follow its larger-than-usual half-point cut made earlier this month with another hefty reduction at either of its upcoming meetings in November or December. At their meeting Sept. 18, Fed officials penciled in two more quarter-point rate cuts at those final 2024 meetings.

Implications of Federal Reserve Ignorance. Last week the Federal Reserve’s rate setting committee lowered its target interest rate by an unusually large ½ percent. This was a mistake. For the first time in 20 years a Federal Reserve Board member who is on the rate-setting committee dissented from the consensus decision. Michelle Bowman argued for a smaller reduction of ¼ percent. She was right and here is why.    No one knows precisely what the proper target rate of interest should be, not the Fed nor any Nobel Prize winning economist. But we do know that the target rate is related to a theoretical concept called the natural rate of interest. More than 100 years ago, Swedish economist Knut Wicksell identified the real rate of interest that is consistent with price stability, and called it the natural rate of interest. Despite that analytical insight economists at the Fed’s Richmond branch correctly noted, “The natural rate is fundamentally unobservable. It is a hypothetical construct that cannot be measured directly.” Nevertheless, economists in the Federal Reserve System have tried to estimate the natural rate of interest using statistical techniques. There are a number of potential influences on the natural rate, including fiscal policy, technological change, and demographics. Some influential Fed researchers suggested that after the Great Recession that began in 2007 the natural rate fell to zero. That finding probably contributed to the Fed’s slow response to the onset of inflation in 2021, keeping their target rate at zero until March 2022 before inching it higher. That delay allowed the price level to increase by 20%, upsetting consumers even today.   In 2021 the Fed clearly did not know the appropriate real rate of interest needed to restore price stability. A similar level of ignorance continues today. No one really knows whether the Federal Reserve’s current 5% target rate is too high (or too low). But we do know that the natural rate of interest depends in part on fiscal policy -- the federal deficit. And the deficit has increased to unprecedented levels over the past few years, pulling up the natural rate of interest. The economy remains at full employment despite the recent upticks in the unemployment rate, so the Fed should avoid a significant reduction in interest rates until there is greater evidence of recession. We now risk a longer-term threat of higher inflation. Good Luck, Bill Silber, September 22, 2024, 4pm   #economy #FederalReserve #interestrates

Federal Reserve’s Historic Rate Cut: What Could This Mean for the U.S. Economy? Yesterday, the Federal Reserve made a bold move, slashing interest rates by 50 basis points, bringing them down to 4.8%. This drastic cut, the first in over four years, comes after a long period of high rates aimed at cooling inflation. Historically, such significant shifts by the Fed reflect a pivot in focus—this time towards reviving a slowing job market. Looking at the data, rate cuts have often triggered economic ripple effects. In the past, lower rates reduced borrowing costs for consumers and businesses, leading to increased spending, investment, and, eventually, job creation. For example, the rate cuts during the early 2000s and post-2008 financial crisis were critical in stabilizing growth. However, there’s a balancing act: while lower rates can stimulate demand, they can also re-ignite inflationary pressures. Inflation has significantly cooled from a peak of 9.1% in 2022 to 2.5% last month, inching closer to the Fed’s 2% target. But the question remains: Can this rate cut avoid destabilizing price levels once again? From a broader perspective, this move could support homeowners, borrowers, and businesses alike. Mortgage refinancing, cheaper credit, and increased investment might lead to a more dynamic economy in the short term. Yet, with still-high costs for essential goods, it’s uncertain whether consumers will feel the relief immediately. Looking Ahead: The Fed has hinted at further cuts by year-end and throughout 2025. The true impact, however, will hinge on factors like wage growth, inflation trends, and global economic conditions. As we approach a crucial presidential election, the rate cut adds another variable to the economic landscape. Do you think this is the right move, or are there risks of reigniting inflation? #FederalReserve #InterestRates #USEconomy #Inflation #JobMarket #EconomicGrowth #Leadership #FinancialNews #News