Politicians Pressure Powell to Give Up the Inflation Fight – Rate Cuts Ahead?

Citizen Watch Report ^

[davikkm]

The latest inflation report says we’re still 50% over the Fed’s target. Is that really close enough? Will inflation disappear by itself? Why is Jerome Powell so close to giving up the inflation fight?

Morgan Stanley thinks the Federal Reserve could start cutting rates as early as September, based on the idea that “inflation is finally under control.”

The Federal effective funding rate has been held at 5% or higher since May 2023, as you can see on the graph below:

(You can also see how the rate was left over 6% – at one point a mind-boggling 19% – for an incredible 17 years to quell the stagflationary lost decade of the 1970s.)

But Powell seems intent on rolling the dice. Gambling the Fed’s done enough, kept rates tight enough for long enough that inflation rate will coast below 2% by itself. According to a recent NBC News report:

“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said.

[dpetty121263]

Well the Government will not stop spending so Hyper-inflation here we come and so better shine up that wheelbarrow for the Grocery Store cause soon it is coming.

[blackdog]

Do the right thing, or do the political thing.

[9YearLurker]

That’s the Dem deal with the Fed: crank up the rates to slow the economy when a Pubbie is prez and drop them, especially before an election, for the Dems.

[johniegrad]

If you follow the link to its end, it reads like a stealth goldbug advertisement.

[wildcard_redneck]

They don’t need higher interest rates, they need to quit printing money and lower taxes. Rising interest rates are punishment on the American people for the idiocy and greed of the ruling class.

[Paladin2]

The “target” should be zer0 %.

[Alberta's Child]

The “ruling class” isn’t the problem here. The real problem is the delusional expectations of ordinary Americans — who want the government to give them everything they want but don’t think they have to pay for it themselves.

Even on FR it’s amazing how many people I come across who think they have some kind of God-given right to pay 3% on their mortgage while earning 5% on their certificates of deposit. In what universe does that make any sense?

[flamberge]

They can wave their arms and yell as much as they want. Rates are not coming down.

Well, except for some special arrangements to preferred borrowers. They will trumpet those as "rate cuts". But nobody that you know will be eligible for the program.

The basic requirement for low interest, non-recourse loans will be "a seven-figure donation to one of the Democrat candidates preferred by the cabal".

Everybody else gets credit at the 22% "prime rate" plus a markup. That sort of thing will bring the economy to a screeching halt. But it still will not stop inflation. Only drastic cuts in government spending can do that now. That has not happened yet.

[Recompennation]

Unless you have some of those mont to mont magic muny cards then you need the wheel barrow to get the fine pickings from yo shiney au to mo bill into yo sub see dizzed place you stay at.
Yes
Your money is worthless.

[wildcard_redneck]

Let me say it again. They don’t need higher interest rates, they need to quit printing money and lower taxes. Rising interest rates are punishment on the American people for the idiocy and greed of the ruling class.

[cgbg]

For the past year we have heard the same mantra:

—Michelle Obama running

—Fed Rate cuts

any day now.....

over and over and over and over again.....

Yawn.

[Alberta's Child]

Rising interest rates are punishment on the American people for the idiocy and greed of the ruling class the American people.

I fixed it for you.

[dpetty121263]

Problem is when the credit runs out so you are back to cash...

[wildcard_redneck]

Spend less and tax less. Inflation is a printing press problem and interest rate hikes are shifting all the burden on the working class while big money grabs even more of the economic pie. You are probably a free trader traitor as well. You probably wax poetic about deindustrialization as well.

[TexasFreeper2009]

they shoot for 2-3% so the economy will continue to grow. There is less reason to invest in anything with zero inflation. Where with a small amount of inflation it is stupid to hide your money under the bed that is worse less every day you don’t use it.

[Alberta's Child]

Spend less and tax less.

Any candidate who runs on that platform is going to lose in a landslide. For some reason you can’t seem to accept this, but it has been a defining characteristic of our economy for as long as I’ve been alive.

You are probably a free trader traitor as well. You probably wax poetic about deindustrialization as well.

You would be wrong about that.

[wildcard_redneck]

Well, if we follow your advice we can wait for it all to collapse, blood to flow, and to start all over. It may be inevitable because organisms and organizations die.

1. From bondage to spiritual growth – Great civilizations are formed in the crucible. The Ancient Jews were in bondage for 400 years in Egypt. The Christian faith and the Church came out of 300 years of persecution. Western Christendom emerged from the chaotic conflicts during the decline of the Roman Empire and the movements of often fierce “barbarian” tribes. American culture was formed by the injustices that grew in colonial times. Sufferings and injustices cause—even force—spiritual growth. Suffering brings wisdom and demands a spiritual discipline that seeks justice and solutions.
2. From spiritual growth to great courage – Having been steeled in the crucible of suffering, courage and the ability to endure great sacrifice come forth. Anointed leaders emerge and people are summoned to courage and sacrifice (including loss of life) in order to create a better, more just world for succeeding generations. People who have little or nothing, also have little or nothing to lose and are often more willing to live for something more important than themselves and their own pleasure. A battle is begun, a battle requiring courage, discipline, and other virtues.
3. From courage to liberty – As a result of the courageous fight, the foe is vanquished and liberty and greater justice emerges. At this point a civilization comes forth, rooted in its greatest ideals. Many who led the battle are still alive, and the legacy of those who are not is still fresh. Heroism and the virtues that brought about liberty are still esteemed. The ideals that were struggled for during the years in the crucible are still largely agreed upon.
4. From liberty to abundance – Liberty ushers in greater prosperity, because a civilization is still functioning with the virtues of sacrifice and hard work. But then comes the first danger: abundance. Things that are in too great an abundance tend to weigh us down and take on a life of their own. At the same time, the struggles that engender wisdom and steel the soul to proper discipline and priorities move to the background. Jesus said that man’s life does not consist in his possessions. But just try to tell that to people in a culture that starts to experience abundance. Such a culture is living on the fumes of earlier sacrifices; its people become less and less willing to make such sacrifices. Ideals diminish in importance and abundance weighs down the souls of the citizens. The sacrifices, discipline, and virtues responsible for the thriving of the civilization are increasingly remote from the collective conscience; the enjoyment of their fruits becomes the focus.
5. From abundance to complacency – To be complacent means to be self-satisfied and increasingly unaware of serious trends that undermine health and the ability to thrive. Everything looks fine, so it must be fine. Yet foundations, resources, infrastructures, and necessary virtues are all crumbling. As virtues, disciplines, and ideals become ever more remote, those who raise alarms are labeled by the complacent as “killjoys” and considered extreme, harsh, or judgmental.
6. From complacency to apathy – The word apathy comes from the Greek and refers to a lack of interest in, or passion for, the things that once animated and inspired. Due to the complacency of the previous stage, the growing lack of attention to disturbing trends advances to outright dismissal. Many seldom think or care about the sacrifices of previous generations and lose a sense that they must work for and contribute to the common good. “Civilization” suffers the serious blow of being replaced by personalization and privatization in growing degrees. Working and sacrificing for others becomes more remote. Growing numbers becoming increasingly willing to live on the carcass of previous sacrifices. They park on someone else’s dime, but will not fill the parking meter themselves. Hard work and self-discipline continue to erode.
7. From apathy to dependence – Increasing numbers of people lack the virtues and zeal necessary to work and contribute. The suffering and the sacrifices that built the culture are now a distant memory. As discipline and work increasingly seem “too hard,” dependence grows. The collective culture now tips in the direction of dependence. Suffering of any sort seems intolerable. But virtue is not seen as the solution. Having lived on the sacrifices of others for years, the civilization now insists that “others” must solve their woes. This ushers in growing demands for governmental, collective solutions. This in turns deepens dependence, as solutions move from personal virtue and local, family-based sacrifices to centralized ones.
8. From dependence back to bondage – As dependence increases, so does centralized power. Dependent people tend to become increasingly dysfunctional and desperate. Seeking a savior, they look to strong central leadership. But centralized power corrupts, and tends to usher in increasing intrusion by centralized power. Injustice and intrusion multiplies. But those in bondage know of no other solutions. Family and personal virtue (essential ingredients for any civilization) are now effectively replaced by an increasingly dark and despotic centralized control, hungry for more and more power. In this way, the civilization is gradually ended, because people in bondage no longer have the virtues necessary to fight.