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All eyes on September. The stupefying summer heat will start to cool. The kids will be loading up on school supplies, ready for a new year.
The biggie, though, at least here at CFO Brew? A potential interest rate cut.
In the latest Federal Reserve meeting, Chair Jerome Powell said that a rate cut “could be on the table” at its next meeting in September, so long as inflation continues to cool.
That would mark the central bank’s first cut in four years. For now, the Fed is holding rates steady at 5.3%, “a two-decade high where they have remained for a year now,” the New York Times reported.
“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,” Powell said, “but we’re not quite at that point.”
Should a rate cut happen in September, its immediate impact would be minimal, since markets expect it, according to the AP. Over time, though, lower rates from the Fed should ease borrowing cost pressure on households and businesses, CNN reported.
Powell was quick to stress that a September rate cut would have no correlation with the upcoming US presidential election, emphasizing that the central bank never uses its “tools to support or oppose a political party, a politician or any political outcome.”
All the while, he underlined that a potential September cut is far from confirmed. Rather, the Fed will be closely monitoring data which currently looks solid, but needs to stay that way.
“It’s going to be inflation data, it’s going to be the employment data, it’s going to be the balance of risks as we see it—it’s going to be the totality of all of that,” Powell said. “It’s just a question of seeing more good data.”