The Mercury Group’s Post

The Federal Reserve's decision to cut its benchmark interest rate by 0.5 percentage points marks the start of its first easing cycle since the pandemic began. This move is driven by several factors: Reasons: Stimulate Growth: Lower rates aim to boost economic activity by making credit more accessible, encouraging spending and investment. Controlled Inflation: With inflation manageable, the Fed sees lower rates as a way to support recovery without adding inflationary pressures. Economic Recovery: The cut is intended to reinforce recovery efforts by aiding affected consumers and businesses. Consequences: Increased Credit Demand: Lower rates typically lead to more borrowing and investment, stimulating economic activity. Market Impact: Reduced returns on fixed-income assets may drive investors toward stocks, increasing market risk. Exchange Rate Effects: Lower rates could weaken the local currency, boosting exports but raising import costs. This strategy aims to foster growth but requires careful monitoring of its effects on markets and currency stability.

.5% isn’t enough to stimulate borrowing and will make inflation worse. The Fed needed to commit to either raising rates substantially or reduce rates substantially. This kind of fence sitting will just prolong any looming issues in the monetary pipeline. My vote would be to have gone full Volker. But, ultimately this is a political move to nudge the needle for a few months and make things look better than they actually are.

The Federal Reserve’s decision to cut its benchmark interest rate by half a percentage point marks a significant pivot in monetary policy, signaling concerns over economic resilience. With inflationary pressures still lingering, this move could serve as a double-edged sword—providing relief to businesses and consumers but also raising questions about long-term economic stability. It will be crucial to monitor how these rate cuts influence not only market liquidity but also global trade dynamics, especially as we continue navigating post-pandemic recovery challenges. Could this spark a broader international response in economic policy adjustments? Only time will tell.

The Fed expects rates to be at 4.4% by the end of 2024, which means four 25 bps cuts in just four months (including today’s 50 bps cut). They must be worried about something…

Pinocchio! The Economy is doing great don’t Panic! But here is a 50point cut! The market cannot have its cake and eat it too! Something has to give but he won’t say that before the election. On a serious note, given the recent revisions in the recent data that the fed and others rely on for making these decisions there needs to be some serious consideration to the data collection methodology and ensuring that they get a better reading on all strata’s of the economy. The current system misses huge amounts of data.

Thought it might only be .25% But the economy is running pretty well. Hope this will provide some budgetary vision for organizations in terms of growth and innovation.

La décision de la Réserve fédérale de réduire son taux d'intérêt directeur de 0,5 % marque un tournant important dans la politique monétaire post-pandémique. En signalant d'autres baisses à venir, la Fed semble anticiper des défis économiques persistants, cherchant à stimuler la croissance et à soutenir l'activité économique. Cette stratégie reflète une volonté proactive de prévenir un ralentissement économique, tout en s'adaptant à un contexte mondial incertain. C’est le moment d’acheter de l’or‼️

That way he is just correcting for the 50bp overshoot. Now, Europe and Switzerland can also make a 50bp move.

Yet the national debt is higher than before and T bills maturing shorter lengths then prior to rate hikes. Seems like the FED is trying to pull the table and not the cloth. 2025 will make 2008 look like a summers afternoon picnic .