Fed: the dumbest or the smartest interest-rate cut?

In July 2019 and September 2024, the Fed embarked on a series of rate cuts at a time when the US economy appeared to be threatened by recession. On each occasion, this helped to stabilise economic activity and employment conditions. The Fed is facing the same problem today, with serious downside risks on the labour market. Furthermore, inflation has still not returned to normal. Powell presented the rate cut as a “risk management” measure (a term familiar to one of his predecessors, Alan Greenspan). He did not commit too much to the future, but as a sudden surge in employment is unlikely, the Fed is likely to extend its easing policy at its next meetings..