🗞️Easy Like Wednesday Morning? Fed Rate Cuts Are Looming – Is That a Good Thing?🗞️
The Federal Reserve is gearing up for another big meeting on September 17-18, marking the sixth of eight meetings scheduled this year. At these meetings, the Fed assesses the state of the economy and decides whether to adjust monetary policy, which includes potentially cutting interest rates. So, with the next meeting just around the corner, let’s talk about what’s happening with inflation and why rate cuts could be on the horizon. 📉Inflation: Cooling Off or Heating Up Again?📈 For a while, it seemed like the Fed was winning the battle against inflation. From mid-2022 to mid-2023, we saw a lot of progress, and many believed the worst of the pandemic-era inflation was behind us. Then, the first quarter of 2024 came along, and inflation started to creep back up, making people question whether the Fed could actually cut rates anytime soon. But there’s good news. Recently, inflation has resumed its downward trend. The Consumer Price Index (CPI), which measures how much consumers are paying for goods and services, was up just 2.5% over the last year – the lowest it’s been since inflation started spiking back in early 2021. On a shorter time frame, inflation has been cooling even faster, rising at annualized rates of just 1.1% over the last three months and 2.0% over the last six months. This points to a gradual easing of inflationary pressures. The Producer Price Index (PPI), which tracks prices from the sellers’ side of the equation, also rose by 0.2% in August. Overall, producer prices have been moderating after some sharp increases earlier in the year, although energy prices have played a big role in these slower inflation numbers. If you take energy out of the equation, inflation is still lingering, so the Fed might not be out of the woods just yet. ✂️Will the Fed Cut Rates This Week? With inflation slowing down, many expect the Fed to cut interest rates in September. But before we get too excited about cheaper borrowing, there’s a lesson we should remember from history – specifically, the 1970s. Back then, Fed Chairman Arthur Burns faced a similar situation: inflation had spiked, then appeared to cool off. Under political pressure, Burns decided to ease monetary policy too soon. The result? Inflation came roaring back, leading to an even bigger crisis. Burns’ experience serves as a cautionary tale about how tricky inflation can be and why the Fed needs to act decisively without letting political pressure sway its decisions. Cutting rates prematurely could reignite inflation, and we could find ourselves in a similar situation to what happened in the 1970s. 📚 Have We Learned From the Past? The big question is, will the Fed make the right call this time? While inflation seems to be under control for now, history shows that it can resurface quickly if not handled properly. The Fed will have to walk a fine line between supporting economic growth and making sure inflation doesn’t come back stronger. As the September meeting approaches, all eyes will be on the Fed’s next move. Will they cut rates and risk repeating the mistakes of the past, or will they stay cautious? Can both things happen at the same time? We’ll just have to wait and see.
0 Comments
Leave a Reply. |
Patrick HueyPatrick Huey is a small business owner and the author of two books on history and finance as well as the highly-rated recently-released fictional work Hell: A Novel. As owner of Victory Independent Planning, LLC, Patrick works with families and non-profit organizations. He is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Advisor in Philanthropy® and an Accredited Tax Preparer. He earned a Bachelor’s degree in History from the University of Pittsburgh, and a Master of Business Administration from Arizona State University. Archives
September 2024
Categories |
Patrick Huey is an investment advisor representative of Dynamic Wealth Advisors dba Victory Independent Planning, LLC. All investment advisory services are offered through Dynamic Wealth Advisors. You can learn more about us by reading our ADV. You can get your copy on the Securities and Exchange Commission website. See https:/ / adviserinfo.sec.gov/IAPD by searching under crd #151367. You can contact us if you would like to receive a copy. The tax services and preparation conducted by Patrick Huey and Victory Independence Planning are considered outside business activities from Dynamic Wealth Advisors. They are separate and apart from Mr. Huey's activities as an investment advisor representative of Dynamic Wealth Advisors.
Patrick Huey is the author of three books: "History Lessons for the Modern Investor", "The Seven Pillars of (Financial) Wisdom" and "The Gifts hat Keep on Giving: High Performance Philanthropy For Real People"; this is considered an outside business activity for Patrick Huey and is separate and apart from his activities as an investment advisor representative with Dynamic Wealth Advisors. The material contained in these books are the current opinions of the author, Patrick Huey but not necessarily those of Dynamic Wealth Advisors. The opinions expressed in these books are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. They are intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed in these books is no guarantee of future results. As always please remember investing involves risk and possible loss of principal capital.
Victory Independent Planning, LLC. provides links for your convenience to websites produced by other providers or industry related material. Accessing websites through links directs you away from our website. Victory Independent Planning, LLC. is not responsible for errors or omissions in the material on third party websites, and does not necessarily approve of or endorse the information provided. Users who gain access to third party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.