Blog

Authored by Mike Shedlock via MishTalk.com,

A trio of Democrat Senators wrote Jerome Powell begging for a three-quarter point cut.

Letter to Powell

Here is the Letter to Powell from Sens. Elizabeth Warren (D-MA), John Hickenlooper (D-CO) and Sheldon Whitehouse (D-RI).

No Case, No Case, No Case

• There is no legitimate case for a three-quarter point cut.

• There is no case for political meddling with the Fed.

• There is no legitimate case for the Fed at all.

However, the one thing worse than the Fed would be to put Congress in control of money supply and interest rates.

This is why it was ridiculous for Trump to claim he could do a better job than the Fed.

When Trump made that statement I warned Democrats would do the same. Today they just did.

What’s Warren’s Angle?

• Help Kamala Harris

• Ask for 75 basis points to make 50 basis points look like the middle ground.

Understanding the Dual Mandate

July 31: Fed is Attentive to the Risks to Both Sides of its Dual Mandate

August 23: Fed Does Not Seek or Welcome Further Labor Market Cooling

September 6: Payroll Report: Manufacturing Sheds 24,000 Jobs, Government Adds 24,000, Big Negative Revisions

Full Time Employment is -1,021,000 from a year ago!

Suddenly, there’s a 59 Percent Chance of Half-Point Interest Rate Cut by the Fed

This morning, I noted Suddenly, there’s a 59 Percent Chance of Half-Point Interest Rate Cut by the Fed

A month ago I predicted a 50 basis point cut this month. Many people thought I was crazy.

Bear in mind that a prediction does not indicate support for the policy. It’s only a reflection of what I think is likely.

To understand the problem with big rate cuts, look ahead.

Looking Ahead

Deficits are massive, tariff hikes are inflationary, just-in-time manufacturing has been replaced by just-in-case stockpiling, demographics put upward pressure on wages while dramatically increasing the need for Medicare, and both Trump and Biden want more production in the US.

Every point in the above paragraph is inflationary.

Underlying inflation pressures are huge. Given neither party’s willingness to do anything to fix out of control spending, it’s the recent decline in the rate of inflation that’s transitory, not the increase in inflation.