On Wednesday, the Federal Reserve cut interest rates for the first time since COVID-19 lockdowns.
The Fed cut the rate by 50 basis points in their first cut since March 2020 (via Fox Business):
The Fed's first interest rate cut since March 2020 lowers the benchmark federal funds rate to a range of 4.75% to 5%.
Interest rates had been at a range of 5.25% to 5.50% since July 2023, the highest level since 2001, as the central bank monitored economic data for signs that stubborn inflation was trending toward its 2% target.
Fox Business reported that Fed Chair Jerome Powell said that the central bank did not plan to wait for inflation to reach 2 percent to cut interest rates. In July, he reportedly said, "if you wait until inflation gets all the way down to 2 percent, 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 percent.”
These remarks were made around the time the Fed faced pressure to cut rates, but did not, CNN noted.
Other times the Fed cut 50 basis points were in March 2020, as mentioned before, September 2007, and January 2001, Fox Business reported:
Wednesday's rate cut decision is expected to be the first in a series of moves to lower interest rates. Markets expect the Fed to announce further rate cuts at its meetings in the months ahead, as the CME FedWatch tool sees a slightly more than 50% probability rates will be lowered to a range of 4.5% to 4.75% in November.
In a statement to Townhall, Alfredo Ortiz, CEO of Job Creators Network, said that this is an indicator that the Biden-Harris economic policies are failing.
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"The Federal Reserve's 50 basis point rate cut is an admission that the Biden-Harris economy is failing and urgently needs support. That's clear when you examine the contracting labor market, record high credit card debt and record-low savings rate. Even with the Fed's help, the economy can't survive another four years of Harris's economic policies,” Ortiz said.
"The Fed is also breaking with tradition and significantly cutting rates just before an election, helping Harris hide the weak economy she's responsible for. This rate cut may be premature given that inflation is still above the 2% target after a 20% increase under the Biden-Harris administration. Americans facing a cost-of-living crisis need further price hikes to decline as fast as possible,” he added.
“Inflationary spending and anti-energy policies by the Biden-Harris administration have put the Federal Reserve and the American economy between a rock and a hard place, with no easy solutions. A conservative Congress and President can help by cutting reckless spending, allowing the Fed to cut rates in the future without fear of reigniting rapidly rising prices,” he concluded.
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