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In the summer of 2024, the Fed was preparing to make a series of interest rate cuts totaling 1.5% by the end of the year. Was it to help the Democrats defeat Donald Trump?
Ostensibly,theFeddoesnotinvolveitselfinpolitics.Butit’shardtodenythatFederalReserveChairmanJeromePowellwasputtinghisthumbonthescaletohelpKamalaHarrisinherbidforthepresidency.Despiteclearsignsthatinflationhadnotbeentamed,PowellprematurelyloweredinterestratesbyacombinedpercentagepointinSeptemberandNovember.
Theresultwasinflationedgingupto2.9%inDecemberand3%inJanuary2025.NowPowellisforcedtoannouncethattherewillbenomoreinterestratecutsfortheforeseeablefuture,perhapsevennomorethisyear.
Thestockmarketdropped198points,losing0.5%ofitsvalueonthatnews.
“ThehotterthanexpectedCPIconfirmsinvestors’anxietyregardingtoo-hotinflationthatwillkeeptheFedonthesidelines(asopposedtocuttingrates),”SameerSamana,WellsFargoInvestmentInstituteheadofglobalequitiesandrealassets,said.“Whileriskmarketscangohigher,itwillbeachoppiertrajectorythanthelasttwoyears.�
