As of the writing of this post, the FOMC (Federal Open Market committee) – led by its chief Jerome Powell, are finally set to change their direction of economic sailing winds from headwind to more normal or even a tailwind…. In the form of lower short-term rates.
In some ways it seems like just a very short time ago since the rates went screaming higher in an effort to stop the inflationary bottlenecks … which were occurring and continue to work through the system no matter what the Federal Reserve did …. right side of the following 10 year chart ….
Fast forward to today and the question is just how much will the Federal Reserve lower rates
In a true “Be careful what you ask for!” type of moment, while the Federal Reserve has telegraphed .25% (or 25 basis points in fancy Wall Street lingo decrease), a legislative representative penned a letter to the Federal Reserve asking for .75% or 75 basis points just the day before yesterday and many of the odds are asking for 1/2 a point or 50 basis points lowering.
Ohh to be the Federal Reserve Chairman, just like little Goldilocks … 25 basis points may be not enough 75 basis points may be too much 50 basis points may be just right … but who knows with all of this tugging it’s not going to be an easy decision for the Federal Reserve and as such it will be very interesting to see what capital market participants reactions may be.
Too cold and not enough or too much and too hot … markets will probably be unhappy because they may believe that there’s some concerns that the Federal Reserve has not expressed. Is .50% or 50 basis points just right, we will know soon enough!
One thing is for sure, the Smartest guys in the room aka the Bond Guys are sure expecting a sizeable rate decrease!
Have a Great “Not too hot and not too cold” Day!
John A. Kvale CFA, CFP
PS – Hilarious AI created Reserve official image in my opinion!
AI Content Authenticity: Ai created the Reserve Goldilocks picture . All of the following text content has been completed by myself and has not been edited or created by AI. Occasionally we do use AI for images and will note when appropriate.
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
