The fed goes by PCE, which is below 3%. Inflation has resumed trending down so seems like raising rates is a dumb decision given the economic risk. Glad the fed agrees.
How tf is this getting so many upvotes. We're witnessing supply and demand forces related to demographic shifts, not something a quarter of a percent bump in rates can fix.
>How tf is this getting so many upvotes.
Because you're in a subreddit built around misunderstanding economic forces.
The very nature of this place is to be uneducated and unsophisticated.
Deflation is not happening nor do we want it to. Wages have outpaced inflation for a year now and adjusted for inflation are higher now than any point in 2019. Now, the priority should be keeping the economy stable and avoiding mass job loss.
The downvotes here are depressing and yet understandable. Wages went up alongside inflation so normal people don’t feel the increase, they just feel the pain. Again, only the wealthy or investor class are truly happy in this economy.
Unemployment low, inflation stubbornly persists.
Logic would say that they would keep raising rates, except that it's an election year, and Biden is putting pressure on Powell to cut rates
While that's true, if the Fed has to decide between high unemployment or high inflation, it'll always choose high unemployment
Unemployment is temporary. Inflation is forever.
They’re going to be faced with a difficult decision - keep rates unchanged to continue fighting inflation or cut rates to fight the inevitable economic decline. Economy feels wobbly as is, despite what the stock market suggests
The stock market is complete fairy dust. Building wealth for people that’ll take virtually no hit when all of their assets magically shift right prior to the nosedive. And like the pandemic, they’ll make record profits while everyone else takes a bath.
They should be. Prices are up. And it’s piggybacking on inflation. Average person can’t tell the difference between a price increase due to inflation versus one to pad the wallet. One is being used to conceal the other.
It also doesn’t account for shrinkflation. Even if prices drop, they’re not giving you the ounces back.
Economy isnt that bad actually, it's just vibes: [https://www.theatlantic.com/ideas/archive/2024/06/us-economy-excellent/678630/](https://www.theatlantic.com/ideas/archive/2024/06/us-economy-excellent/678630/)
The last fed meeting before the election is [Sept. 17-18](https://www.usatoday.com/story/money/2023/12/12/federal-reserve-2024-meeting-schedule/71893580007/), so I think a small cut is likely to happen then.
Yep I doubt it as well. I think they’d rather have a recession than inflation, if they had to pick one.
Next year I expect 1-2 small cuts. I don’t expect rates to get back where they were for the last 20 years until 2028.
Unfortunately that either means real estate prices will go down, or apartment rents will go up. My guess is the latter. Which ironically will make inflation look high, which will keep rates high.
To clarify, I don’t think the fed will cut to the rates we experienced during ZIRP. The person above speculated that rates would get back “to where they were” in 2028. I could see nominal cuts, but not to that degree.
Housing inventory will until to trickle up but it will only be a trickle until 2030. Only then will we see rates lower that people feel like they can upgrade in mass plus that’s when boomers will start to realize aging in place isn’t going to work for them
Really makes it hard to believe stock manipulation doesn't happen on a massive scale. Who really believed that SIX rate cuts were gonna happen let alone half that amount.
Everyone is fine making money off baseless statements and no one wants to admit the machine needs to slow down.
On we go i guess they just better not tell me it's worthless when it's my time to ride off into the sunset
The earnings aren't but how is rate speculation anything other than baseless? I think there's gonna be 4 cuts actually maybe 3 but it could also be zero. Guess we 'll see.
How is that not baseless? There's no indication of multiple cuts and there never was to anyone listening to the Fed chair. Of course why say none and slow yields when u can say 6!
As a bear investor, I hope you're wrong. I hope we have multiple rate cuts this year. But it makes sense because they don't want to cause a recession until after trump get elected.
Unemployment is rising, though. Add to that they're overstating numbers, more PT jobs gained and FT jobs lost + immigrants filling those roles, it's going to absolutely be the catalyst.
Inflation isn't good enough to cut, but the employment mandate will counterbalance it and his hand will be forced.
On the other hand, there should be no cut until inflation hits their target. Even then, they won’t go to zero unless shit hits the fan. It seems like that’s what people just expect nowadays. Currently we’re actually right around the historical average
Hasn’t he said this consistently for the past 9 months? Rates higher for longer, no rate cuts in the first half of 2024, pending data. I feel like he keeps saying the same thing over and over and some people choose to ignore it and project whatever they wish he had said onto the Fed as a whole, then cue the shocked (absolutely shocking news!) articles that discuss the surprise news from the Fed that rates will be higher for longer! Rinse. Repeat.
And the month to month data reporting has been confounding in its back and forth. It has been consistently where it is now, within a range, for a year or so.
And then previous month or previous quarter data is *revised*. Sometimes, by a great amount.
It feels like we’re all being fucked with.
exactly. I'm shocked that so many people heard "6 rates cuts this year!" when he said "we are committed to bringing inflation down to 2% and keeping it there and will do what it takes to get there"
It's because they also release projections that are based on the current trend of data and analysts try to take that and do better. But as the Fed gets more data of course they alter their projects. Initially inflation came down fast so their projects reflected that, rate cuts could be possible. Once inflation stopped and bumped back up the projected cuts started going away.
He's consistent but the fed reports have projections based on their current data and those projects (IIRC) shows 3 possible rate cuts if the trend of dropping inflation continued. When it stalled and even bumped up, those projections changed.
With that said, his press conferences have been consistent in that they will react to the data and no decision (rate cuts, rate holds, or rate increases) is off the table.
Right but the confusion is the protections in the Fed report that accompanies his conferences. Not saying people aren't overstepping for clicks but that's where it comes from
I honestly thought the fed was providing obscure comments on purpose to keep the market from overreacting. Because all the reports of what he said and what it meant was confusing for sure
Blind wishful thinking. Too many people are desperate to refinance or see mortgage estimate go down and they act accordingly thinking that it's ok, it's ok, rate cuts are coming, we just need to tough out another month/week/day.
If the Fed was smart we'd have been at a much higher rate level than we are long ago.
That's not even getting into the artificially low rates they kept since the last recession, just simply speaking to when they started finally raising rates during/post covid.
The fact borrowing and spending were still very high shows rates were having minimal effect. Hell where they currently are isn't anything close to high by historical standards.
Well, I disagree. The Feds has more tools than interest rates. They have the money supply. They shrunk their balance sheet by a couple trillion at this point, which is working. Banks are lending less private credit is filling the void. Money is leaving the system, albeit slowly. Higher rates are primarily focused on halting or slowing spending/projects that create excess demand. I would argue attacking the availability of capital (money supply) is more effective but slower.
In my opinion, congress is to blame. They are overheating the market with their massive spending / deficits. Inflation would have cooled off more rapidly if they hit the breaks. But Ukraine war, Israel, lingering COVID shit, etc……
fine meeting aback rainstorm pot cautious glorious chop modern sophisticated
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Sorry I should have put an /s haha
I don’t know why everyone always parrots the “election year” narrative, the market has shown that it simply does not give af.
The fed has learned from 2008 what it needs to do to kick the can down the road, i.e. by being more cautious about raising rates than they were back in 2004-06. Being more dovish on inflation keeps the economy from going into recession.
If they raised rates then they would face another banking crisis.. when they already bailed out banks, via the BTFP the previous year. The Fed is just coasting.. they don’t actually want to reduce inflation to 2%, they want to reduce government debts and keep people working.
"For most of us" you mean for folks that are waiting for property prices to come down?
I think the reason they haven't gone more restrictive with rates is because they are concerned about ripple effects all across the economy, leading to job losses for a lot more people. At that point there's gonna be another group of folks saying the Fed doesn't care about "most of us".
Remember the Fed has a dual mandate - price stability AND maximum employment. Their mandate is "future" inflation rate at 2%, their mandate is not negative inflation.
Well...if ridiculously high prices are your pain, raising rates is only going to increase your pain. You'll cut back on discretionary spending but I assume high prices of discretionary items aren't causing you pain but that of necessary purchases are. You can't skip necessary purchases. Which is exactly why high rates break the backs of the financially weaker much before they hurt the financially rich.
The point is to get prices going in the opposite direction. If the feds wouldve just came out swinging with Volcker rates, we probably would be better off now. We could’ve had a yr or 2 of shit rather than 4 yrs and counting
Volcker shock did cause a recession. I'm sure expensive eggs, though a pain, are better than job loss.
Accelerating too much followed by braking too hard followed by compensatory acceleration followed by compensatory braking causes volatility which will erode the financial system's trust in the Fed, a much bigger problem than inflation. So the Fed has to move the dial slowly and ensure they don't overshoot.
Yes it sucks but sometimes things just suck and it's no one's fault. If you want to turn a ship, and you spin the wheel too fast, the centrifugal force would tilt the ship and risk drowning. Not the best analogy, I know.
I figure they’ve done some math, that no one wants to talk much about in public, and raising rates begins a terrifying cliff of debt on top of debt. Real global economy-threatening shit.
Not politically convenient.
It's why they like the slow burn. Zombie companies going down one at a time, BoDs are slowly having to make painful decisions but avoiding and outright crisis. When you're steering a ship as big as the US (and world) economy, you don't want to cut the wheel hard.
It’s been an absolutely torrid run now for 18 months. There was a gap down in March and October of 2023. Late April into early May of this year was a little head fake. Recovered and kept on going since. Kinda normal market gyrations, honestly, but in the face of very changeable metrics, and a consumer sentiment that is way down.
I think we are all starting to see and accept the theatrics of all of it now, and feel helpless to reason it out.
The only way your gonna see any rate cuts is a decent size recession.. if that's 5 years out then your first cut will be in 5 years. Imo if it wasn't a election year they would have raised already
Gotta love it. Crank up inflation so that everyone is paying more money to survive, then crank up interest rates so they can double dip on the increased prices and interest.
Slowly lower it again over a long period of time
Honestly, not sure why the fed would make any cuts when the economy is doing well. Interest rate cuts and increases are the only bullets that the fed has so not sure why they would waste a bullet when the economy doesn’t need to be stimulated. Until the economy goes south, this will be the new reality…high interest rates. The past twenty years were an anomaly.
Inflation doesn't work that way. After you slap it back into place you have to stop slapping. Rates will come down gradually after they meet target, as long as inflation stays good and until the inevitable next crisis.
Considering what could have happened with rate increases or cuts, they seem to be doing a descent job of walking that fine line between throwing fuel into the inflation fire or dousing it with a signifiant downturn in the economy.
**The Federal Reserve on Wednesday kept its key interest rate unchanged and signaled that just one cut is expected before the end of the year.**
With markets hoping for a more accommodative central bank, Federal Open Market Committee policymakers following their two-day meeting took two rate reductions off the table from the three indicated in March. The committee also signaled that it believes the long-run interest rate is higher than previously indicated.
New forecasts released after this week’s two-day meeting indicated only slight optimism that inflation remains on track to head back to the Fed’s 2% goal, allowing for some policy loosening later this year.
“Inflation has eased over the past year but remains elevated,” the post-meeting statement said, echoing language from the last statement. In the only substantive change, the new statement followed with, “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”
The previous language said there had been “a lack of further progress” on inflation.
The committee, in its closely watched “dot plot” of individual participants’ rate expectations, did indicate a more aggressive cutting path in 2025, with four reductions totaling a full percentage point anticipated, up from three.
For the period through 2025, the committee now sees five total cuts equaling 1.25 percentage points, down from six in March.
If the projections hold, it would leave the federal funds rate benchmark at 4.1% by the end of next year, higher by 0.2 percentage point than the March outlook.
Another significant development occurred with the projection for the long-run rate of interest, essentially a level that neither boosts nor restricts growth. That moved up to 2.8% from 2.6%, a nod that the higher-for-longer narrative is gaining traction among Fed officials.
In a further indication of a hawkish bent from central bankers, the dot plot showed four officials in favor of no cuts this year, up from two previously.
Elsewhere in the FOMC’s Summary of Economic Projections, participants raised their 2024 outlook on inflation to 2.6%, or 2.8% when excluding food and energy. Both inflation projections were 0.2 percentage point higher than in March.
The Fed’s preferred inflation gauge is the Commerce Department’s personal consumption expenditures price index, which showed respective readings of 2.7% and 2.8% for April. The Fed focuses more on core inflation as a better long-term indicator. The SEP indicates inflation returning to the 2% target, but not until 2026.
The decision and informal forecasts from the 19 meeting participants come during a volatile year for markets and investors’ hopes that the Fed would start easing after it raised benchmark rates to their highest level in some 23 years.
The federal funds rate, which sets overnight borrowing costs for banks but feeds into many consumer debt products, is targeted in a range between 5.25%-5.5%, the result of 11 rate increases between March 2022 and July 2023.
Earlier in the day, as Fed officials were preparing their economic and rate outlooks, the Bureau of Labor Statistics released the consumer price index for May. The report showed that inflation was flat on the month while the annual rate edged lower from the rate in April to 3.3%.
That’s still well above the Fed’s 2% target but also considerably below the peak of just over 9% seen nearly two years ago. Core readings excluding food and energy prices were at 0.2% and 3.4% respectively.
In the first quarter of 2024, economic data softened from where it had been for most of the previous year, with GDP rising at just a 1.3% annualized pace. April and May have been a mixed bag for data, but the Atlanta Fed is tracking GDP growth at 3.1%, a solid pace especially in light of persistent recession worries that have dogged the economy for the past two years.
Inflation data, though, has been equally resilient and has posed problems for central bankers.
The year began with markets expecting a vigorous pace of rate cuts, only to be thwarted by sticky inflation and statements from Fed officials that they are unconvinced that inflation is heading back convincingly to target.
How so? Will people trade their 3% for a 5% (maybe)?
Considering property taxes alone you won’t even be paying the same or less than what you were paying with rates less than or equal to 3%.
There can be many sideline FTHB, but if supply isn’t there, what will they buy?
All location dependent, but you mentioned Northeast that’s why I’m trying to understand where you’re coming from. Some states had supply issues even before the pandemic, it hasn’t gotten any better.
I just got another update today from another listing I was particularly interested in. Sold for 95k over.
Good call. We don’t need to lower rates. I don’t understand the obsession on that. Earnings are just fine and inflation isn’t exactly going away very quickly. I would rather have the dry powder!
I hope people know that if you want rates to keep increasing to bring down house prices it's not going to happen until people start losing their jobs and savings. That's when houses are going to drop. So unless you have a depression proof job I wouldn't be hoping for that.
Pretty telling that, even with no cuts or hikes in a year now, that the 10YR treasury has been wildly volatile, in a range from 4% to 5% yields. What it tells me is that keeping the rates higher takes more than just talk from the Fed. It also takes a market for the bonds that Uncle Sam issues, and sells, and that market has been very light.
So I have an actual question about rates, I understand the concept that raising rates should lower prices, but that is not happening because of the "lock in effect". Now my question is, which is brought up every now and then, do you think lowering rates would increase inventory enough to lower prices, or would they just continue to skyrocket?
Yes, not a popular opinion here but I am in the camp that lower rates will help unlock more inventory and increase supply faster which will ease prices.. I don't see home prices skyrocketing from these levels in most regions.
Remember, about 90% of homeowners have a rate under 6%, 80% under 5%, 60% under 4% and over 20%+ under 3% rate.. majority of home owners can't or won't give up their rates at these levels.. unless a major life event happens and they have to..
More supply = good
This is why I get the idea of raising rates to try and lower prices, which never happened, but now with such low inventory and my budget of $500k and under, any home in that price range is swarmed with 100 people throwing in offers. I just wonder if lowering rates again would make people continue to raise prices
"indicates one cut coming this year"
uh... where did they indicate that? this is what the press conference said:
"**We have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent. So far this year, the data have** ***not*** **given us that greater confidence.** The most recent inflation readings have been more favorable than earlier in the year, however, and there has been modest further progress toward our inflation objective. We will need to see more good data to bolster our confidence that inflation is moving sustainably toward 2 percent."
Im pretty sure they need to increase rates and just holding out for the election before a much needed hike. the issue is the feds just holding out for the elections whom ever wins gonna deal with the cramp show to come because of the hold out.
I would bet money there are no rate cuts this year.
Instead they should raise it .25%
Seriously
Why?
Because inflation has held steady around 3% for a year.
The fed goes by PCE, which is below 3%. Inflation has resumed trending down so seems like raising rates is a dumb decision given the economic risk. Glad the fed agrees.
Believe it or not, some people like saving money
Why not?
Because inflation has been coming down and it isn’t worth the risk to economic stability
But prices increased like 40% in a few years. You think inflation “cooling” is going to fix that?
How tf is this getting so many upvotes. We're witnessing supply and demand forces related to demographic shifts, not something a quarter of a percent bump in rates can fix.
>How tf is this getting so many upvotes. Because you're in a subreddit built around misunderstanding economic forces. The very nature of this place is to be uneducated and unsophisticated.
What’s the solution to the 40% price increases? Just inventory increase?
It's not supposed to, and if you think it is you are seriously misguided.
Deflation is not happening nor do we want it to. Wages have outpaced inflation for a year now and adjusted for inflation are higher now than any point in 2019. Now, the priority should be keeping the economy stable and avoiding mass job loss.
The downvotes here are depressing and yet understandable. Wages went up alongside inflation so normal people don’t feel the increase, they just feel the pain. Again, only the wealthy or investor class are truly happy in this economy.
This is why it’s tough to take “wages are up” seriously.
Ok! 👍
Hope you learned something
You should not be getting so many downvotes. These people are clueless.
Lol yeah I get downvoted for wanting to avoid mass job loss
I dont think "fixing" that is the Feds job, nor should it be
Go to buy ANYTHING and look at the prices
That’s pretty dumb logic
For the lols
Dumb
More like another 5%, but they're afraid to cause their actions have already tanked the economy for the next decade.
Fraudulent financial markets are booming... Aaaaaand thats it! Oh and as a ceo I'll say A.I. 5 times and my company will be worth trillions
This guy stocks
Stonks
Literally gigabyte
Unemployment low, inflation stubbornly persists. Logic would say that they would keep raising rates, except that it's an election year, and Biden is putting pressure on Powell to cut rates
Unemployment is low because of a bunch of low paying jobs. Every metric the government spews is so easily manipulated.
While that's true, if the Fed has to decide between high unemployment or high inflation, it'll always choose high unemployment Unemployment is temporary. Inflation is forever.
Have they done that recently or just in the 70s
Well they have been manipulated for decades so it is not like they can twist them much more
Unsubstantiated BS.
I think it should be 100 basis points
They’re going to be faced with a difficult decision - keep rates unchanged to continue fighting inflation or cut rates to fight the inevitable economic decline. Economy feels wobbly as is, despite what the stock market suggests
The stock market is complete fairy dust. Building wealth for people that’ll take virtually no hit when all of their assets magically shift right prior to the nosedive. And like the pandemic, they’ll make record profits while everyone else takes a bath.
Profits are up.
They should be. Prices are up. And it’s piggybacking on inflation. Average person can’t tell the difference between a price increase due to inflation versus one to pad the wallet. One is being used to conceal the other. It also doesn’t account for shrinkflation. Even if prices drop, they’re not giving you the ounces back.
Govt data will miraculously be amended downward after the election.
They are amended when all the data gets in regularly and it's way before election. This isn't the conspiracy sub.
This isn't the conspiracy sub?? Could've fooled me. Where's the sub for RE conspiracies? Sounds like fun!
You sure about that? You sure about that? You sure about that?
Economy isnt that bad actually, it's just vibes: [https://www.theatlantic.com/ideas/archive/2024/06/us-economy-excellent/678630/](https://www.theatlantic.com/ideas/archive/2024/06/us-economy-excellent/678630/)
It's not just vibes for tech. No jobs. Sharply declining pay. Sure feels like a recession.
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maybe one right before Nov 5th
!remind remember remember the fifth of november
Iwemember
The Fed is meeting the day after the election I think.
The last fed meeting before the election is [Sept. 17-18](https://www.usatoday.com/story/money/2023/12/12/federal-reserve-2024-meeting-schedule/71893580007/), so I think a small cut is likely to happen then.
Bingo
Yep I doubt it as well. I think they’d rather have a recession than inflation, if they had to pick one. Next year I expect 1-2 small cuts. I don’t expect rates to get back where they were for the last 20 years until 2028. Unfortunately that either means real estate prices will go down, or apartment rents will go up. My guess is the latter. Which ironically will make inflation look high, which will keep rates high.
Why 2028 specifically? I don’t think we’ll ever see ZIRP again in our lifetimes but that’s just me speaking arbitrarily
Why? You don’t think there will be another recession? When a recession hits fed will cut
To clarify, I don’t think the fed will cut to the rates we experienced during ZIRP. The person above speculated that rates would get back “to where they were” in 2028. I could see nominal cuts, but not to that degree.
When will markets price in the end of ZIRP? These assets are all baking in an assumed 2% rate
Show your work
I don’t expect ZIRP again. I more am thinking mortgage rates below 5% by 2028.
I disagree with rents going up because most of what is being allowed to build is big apartments because of zoning and financing.
Housing inventory will until to trickle up but it will only be a trickle until 2030. Only then will we see rates lower that people feel like they can upgrade in mass plus that’s when boomers will start to realize aging in place isn’t going to work for them
I think one near the end, or early next year due do debt
Funny how stocks went up and rates fell on November last year on expectations of 6 cuts now we are down to 1 🤡
Really makes it hard to believe stock manipulation doesn't happen on a massive scale. Who really believed that SIX rate cuts were gonna happen let alone half that amount. Everyone is fine making money off baseless statements and no one wants to admit the machine needs to slow down. On we go i guess they just better not tell me it's worthless when it's my time to ride off into the sunset
Quarterly earnings fuel the market along with rate speculation, but it's definitely not baseless statements.
The earnings aren't but how is rate speculation anything other than baseless? I think there's gonna be 4 cuts actually maybe 3 but it could also be zero. Guess we 'll see. How is that not baseless? There's no indication of multiple cuts and there never was to anyone listening to the Fed chair. Of course why say none and slow yields when u can say 6!
Theres many ways to do so
As a bear investor, I hope you're wrong. I hope we have multiple rate cuts this year. But it makes sense because they don't want to cause a recession until after trump get elected.
there can't be any but if they say that out loud they'll tank the market
!Remindme 6 months
Unemployment is rising, though. Add to that they're overstating numbers, more PT jobs gained and FT jobs lost + immigrants filling those roles, it's going to absolutely be the catalyst. Inflation isn't good enough to cut, but the employment mandate will counterbalance it and his hand will be forced.
I would be surprised if there is no rate increase considering they keep saying "economy is so strong"
They have the national debt and banks to worry about. There will be no increase unless inflation ticks up.
On the other hand, there should be no cut until inflation hits their target. Even then, they won’t go to zero unless shit hits the fan. It seems like that’s what people just expect nowadays. Currently we’re actually right around the historical average
Hasn’t he said this consistently for the past 9 months? Rates higher for longer, no rate cuts in the first half of 2024, pending data. I feel like he keeps saying the same thing over and over and some people choose to ignore it and project whatever they wish he had said onto the Fed as a whole, then cue the shocked (absolutely shocking news!) articles that discuss the surprise news from the Fed that rates will be higher for longer! Rinse. Repeat.
This is exactly it. The messaging has been fairly clear and very consistent
And the month to month data reporting has been confounding in its back and forth. It has been consistently where it is now, within a range, for a year or so. And then previous month or previous quarter data is *revised*. Sometimes, by a great amount. It feels like we’re all being fucked with.
exactly. I'm shocked that so many people heard "6 rates cuts this year!" when he said "we are committed to bringing inflation down to 2% and keeping it there and will do what it takes to get there"
It's because they also release projections that are based on the current trend of data and analysts try to take that and do better. But as the Fed gets more data of course they alter their projects. Initially inflation came down fast so their projects reflected that, rate cuts could be possible. Once inflation stopped and bumped back up the projected cuts started going away.
He's consistent but the fed reports have projections based on their current data and those projects (IIRC) shows 3 possible rate cuts if the trend of dropping inflation continued. When it stalled and even bumped up, those projections changed. With that said, his press conferences have been consistent in that they will react to the data and no decision (rate cuts, rate holds, or rate increases) is off the table.
so basically he didn't say one or the other, just that they will follow what the data says.
Right but the confusion is the protections in the Fed report that accompanies his conferences. Not saying people aren't overstepping for clicks but that's where it comes from
I honestly thought the fed was providing obscure comments on purpose to keep the market from overreacting. Because all the reports of what he said and what it meant was confusing for sure
Blind wishful thinking. Too many people are desperate to refinance or see mortgage estimate go down and they act accordingly thinking that it's ok, it's ok, rate cuts are coming, we just need to tough out another month/week/day.
Jerome has been saying that. The issue is media keeps reporting it differently based on "polls" instead of the horses mouth
Looks like the fed is smarter than markets after all. You love to see it.
If the Fed was smart we'd have been at a much higher rate level than we are long ago. That's not even getting into the artificially low rates they kept since the last recession, just simply speaking to when they started finally raising rates during/post covid. The fact borrowing and spending were still very high shows rates were having minimal effect. Hell where they currently are isn't anything close to high by historical standards.
Well, I disagree. The Feds has more tools than interest rates. They have the money supply. They shrunk their balance sheet by a couple trillion at this point, which is working. Banks are lending less private credit is filling the void. Money is leaving the system, albeit slowly. Higher rates are primarily focused on halting or slowing spending/projects that create excess demand. I would argue attacking the availability of capital (money supply) is more effective but slower. In my opinion, congress is to blame. They are overheating the market with their massive spending / deficits. Inflation would have cooled off more rapidly if they hit the breaks. But Ukraine war, Israel, lingering COVID shit, etc……
Fed didn’t hike into obvious inflation in 2021. They’re terrible at their job.
I'm surprised they don't raise rates
I wonder why they dont. All they’ve been doing is stretching out the pain for most of us.
Elections. Next year will be a bloodbath
Yeah, but the year after that is midterms so they might be waiting until those are over
Yeah true the stock market has never gone down in an election year
fine meeting aback rainstorm pot cautious glorious chop modern sophisticated *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Never?
Sorry I should have put an /s haha I don’t know why everyone always parrots the “election year” narrative, the market has shown that it simply does not give af.
The market doesn’t care but the fed does.
The fed has learned from 2008 what it needs to do to kick the can down the road, i.e. by being more cautious about raising rates than they were back in 2004-06. Being more dovish on inflation keeps the economy from going into recession.
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If they raised rates then they would face another banking crisis.. when they already bailed out banks, via the BTFP the previous year. The Fed is just coasting.. they don’t actually want to reduce inflation to 2%, they want to reduce government debts and keep people working.
"For most of us" you mean for folks that are waiting for property prices to come down? I think the reason they haven't gone more restrictive with rates is because they are concerned about ripple effects all across the economy, leading to job losses for a lot more people. At that point there's gonna be another group of folks saying the Fed doesn't care about "most of us". Remember the Fed has a dual mandate - price stability AND maximum employment. Their mandate is "future" inflation rate at 2%, their mandate is not negative inflation.
And how will raising rates ease your pain?
Well something drastic needs to happen to reset these ridiculously high prices
Well...if ridiculously high prices are your pain, raising rates is only going to increase your pain. You'll cut back on discretionary spending but I assume high prices of discretionary items aren't causing you pain but that of necessary purchases are. You can't skip necessary purchases. Which is exactly why high rates break the backs of the financially weaker much before they hurt the financially rich.
The point is to get prices going in the opposite direction. If the feds wouldve just came out swinging with Volcker rates, we probably would be better off now. We could’ve had a yr or 2 of shit rather than 4 yrs and counting
Volcker shock did cause a recession. I'm sure expensive eggs, though a pain, are better than job loss. Accelerating too much followed by braking too hard followed by compensatory acceleration followed by compensatory braking causes volatility which will erode the financial system's trust in the Fed, a much bigger problem than inflation. So the Fed has to move the dial slowly and ensure they don't overshoot. Yes it sucks but sometimes things just suck and it's no one's fault. If you want to turn a ship, and you spin the wheel too fast, the centrifugal force would tilt the ship and risk drowning. Not the best analogy, I know.
By definition, didnt we go into recession last yr?
We can only hope
I figure they’ve done some math, that no one wants to talk much about in public, and raising rates begins a terrifying cliff of debt on top of debt. Real global economy-threatening shit. Not politically convenient.
It's why they like the slow burn. Zombie companies going down one at a time, BoDs are slowly having to make painful decisions but avoiding and outright crisis. When you're steering a ship as big as the US (and world) economy, you don't want to cut the wheel hard.
So much market selloff done by the algos on this announcement. What a farce
No rate cuts until MC Donald's restores the dollar menu.
Went to McDonald's the other day.. . It cost 52 dollars for three adults.. That is fucking insane for McDonald's
Who willingly spends $52 at McDonalds though?
Took my adult kids for fun
Hell you could have gone to Texas Roadhouse and bought them a steak dinner with 2 sides for all of you for $52
In n out is cheaper and better. I hope you have one nearby.
Right call.
"I am altering the deal, pray I don't alter it any further" - Darth Powell
The economy is going to crash, doesn't matter that the FED keeps trying to prop it up.
Yep. The stock market correction is going to be insane.
It’s been an absolutely torrid run now for 18 months. There was a gap down in March and October of 2023. Late April into early May of this year was a little head fake. Recovered and kept on going since. Kinda normal market gyrations, honestly, but in the face of very changeable metrics, and a consumer sentiment that is way down. I think we are all starting to see and accept the theatrics of all of it now, and feel helpless to reason it out.
"The market will remain irrational longer than you can remain solvent."
Yep. Which is why you always play
Yup, that 20%+ decline in 2022 was meaningless right? The market is still down when inflation is applied to nominal returns.
What will cause it to crash?
They have no clue.
When people can no longer afford life, that's when it crashes. People simply stop consuming and the wheels come off.
But its not going to be a "crash" just a very slow incline down.
An “incline down” is called a decline.
Hahaha good call don’t know what I was thinking
The only way your gonna see any rate cuts is a decent size recession.. if that's 5 years out then your first cut will be in 5 years. Imo if it wasn't a election year they would have raised already
Gotta love it. Crank up inflation so that everyone is paying more money to survive, then crank up interest rates so they can double dip on the increased prices and interest. Slowly lower it again over a long period of time
And its gone (hope of divorcing the rate)
Raise them!!!! RAISE!!!!!!
Honestly, not sure why the fed would make any cuts when the economy is doing well. Interest rate cuts and increases are the only bullets that the fed has so not sure why they would waste a bullet when the economy doesn’t need to be stimulated. Until the economy goes south, this will be the new reality…high interest rates. The past twenty years were an anomaly.
Well said. It’s going to take the current generation of big spenders some time to unwire their brains from the low rates of the last generation.
Inflation doesn't work that way. After you slap it back into place you have to stop slapping. Rates will come down gradually after they meet target, as long as inflation stays good and until the inevitable next crisis.
Considering what could have happened with rate increases or cuts, they seem to be doing a descent job of walking that fine line between throwing fuel into the inflation fire or dousing it with a signifiant downturn in the economy.
Who’s willing to bet they raise the rate in December?
I’ll take that bet
I’ll check back on Christmas 😅
For sure
I'll be surprised if we get one.
Higher for longer?
They didn't say one cut, wtf, one cut IF inflation keeps going down
Increase rates.
Rate cut right before the elections 😂 😂 😂
Rate cut if the data supports it 😂😂😂
Gotta have Dow above 40,000 on November 5
Their November meeting is purposely scheduled for *after* the election.
Yea right, there will be no cut this year
**The Federal Reserve on Wednesday kept its key interest rate unchanged and signaled that just one cut is expected before the end of the year.** With markets hoping for a more accommodative central bank, Federal Open Market Committee policymakers following their two-day meeting took two rate reductions off the table from the three indicated in March. The committee also signaled that it believes the long-run interest rate is higher than previously indicated. New forecasts released after this week’s two-day meeting indicated only slight optimism that inflation remains on track to head back to the Fed’s 2% goal, allowing for some policy loosening later this year. “Inflation has eased over the past year but remains elevated,” the post-meeting statement said, echoing language from the last statement. In the only substantive change, the new statement followed with, “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.” The previous language said there had been “a lack of further progress” on inflation. The committee, in its closely watched “dot plot” of individual participants’ rate expectations, did indicate a more aggressive cutting path in 2025, with four reductions totaling a full percentage point anticipated, up from three. For the period through 2025, the committee now sees five total cuts equaling 1.25 percentage points, down from six in March. If the projections hold, it would leave the federal funds rate benchmark at 4.1% by the end of next year, higher by 0.2 percentage point than the March outlook. Another significant development occurred with the projection for the long-run rate of interest, essentially a level that neither boosts nor restricts growth. That moved up to 2.8% from 2.6%, a nod that the higher-for-longer narrative is gaining traction among Fed officials. In a further indication of a hawkish bent from central bankers, the dot plot showed four officials in favor of no cuts this year, up from two previously. Elsewhere in the FOMC’s Summary of Economic Projections, participants raised their 2024 outlook on inflation to 2.6%, or 2.8% when excluding food and energy. Both inflation projections were 0.2 percentage point higher than in March. The Fed’s preferred inflation gauge is the Commerce Department’s personal consumption expenditures price index, which showed respective readings of 2.7% and 2.8% for April. The Fed focuses more on core inflation as a better long-term indicator. The SEP indicates inflation returning to the 2% target, but not until 2026. The decision and informal forecasts from the 19 meeting participants come during a volatile year for markets and investors’ hopes that the Fed would start easing after it raised benchmark rates to their highest level in some 23 years. The federal funds rate, which sets overnight borrowing costs for banks but feeds into many consumer debt products, is targeted in a range between 5.25%-5.5%, the result of 11 rate increases between March 2022 and July 2023. Earlier in the day, as Fed officials were preparing their economic and rate outlooks, the Bureau of Labor Statistics released the consumer price index for May. The report showed that inflation was flat on the month while the annual rate edged lower from the rate in April to 3.3%. That’s still well above the Fed’s 2% target but also considerably below the peak of just over 9% seen nearly two years ago. Core readings excluding food and energy prices were at 0.2% and 3.4% respectively. In the first quarter of 2024, economic data softened from where it had been for most of the previous year, with GDP rising at just a 1.3% annualized pace. April and May have been a mixed bag for data, but the Atlanta Fed is tracking GDP growth at 3.1%, a solid pace especially in light of persistent recession worries that have dogged the economy for the past two years. Inflation data, though, has been equally resilient and has posed problems for central bankers. The year began with markets expecting a vigorous pace of rate cuts, only to be thwarted by sticky inflation and statements from Fed officials that they are unconvinced that inflation is heading back convincingly to target.
How can April and May be a mixed bag and then have a great quarter of GDP? lol
Because they are lying to us
lol another quiet revision in the middle of the night
“A mixed bag FOR DATA” Lie better next time
That’s because the rate hikes won’t start till after the election.
Dumb
RIP current sales prices in the Northeast
How so? Will people trade their 3% for a 5% (maybe)? Considering property taxes alone you won’t even be paying the same or less than what you were paying with rates less than or equal to 3%.
Nope- but sideline first time buyers will all of a sudden qualify for more house
There can be many sideline FTHB, but if supply isn’t there, what will they buy? All location dependent, but you mentioned Northeast that’s why I’m trying to understand where you’re coming from. Some states had supply issues even before the pandemic, it hasn’t gotten any better. I just got another update today from another listing I was particularly interested in. Sold for 95k over.
My point is that it’s already insane in the Northeast now- it will get even crazier with lower rates
What lower rates? The 30 year barely moved, as the FFR held steady. It's been jittering around 7% for a long time, and will likely continue to do so.
I live in NJ. I don’t think a small cut is going to materially change the math for most people.
😂🤣😂
Good call. We don’t need to lower rates. I don’t understand the obsession on that. Earnings are just fine and inflation isn’t exactly going away very quickly. I would rather have the dry powder!
Rate cuts are finally coming. Wooot woot let's do a bear dance. Bear dance = happy dance.
It's very clear who they work for and who's posting the bond
Just fuckin send it , let’s see how bad it can get lol
The FED exists to serve capital interests. Since the early 1970s, federal banking policy has consistently acted in open contempt of the working class.
Keep dangling that carrot to the puppets
I hope people know that if you want rates to keep increasing to bring down house prices it's not going to happen until people start losing their jobs and savings. That's when houses are going to drop. So unless you have a depression proof job I wouldn't be hoping for that.
Pretty telling that, even with no cuts or hikes in a year now, that the 10YR treasury has been wildly volatile, in a range from 4% to 5% yields. What it tells me is that keeping the rates higher takes more than just talk from the Fed. It also takes a market for the bonds that Uncle Sam issues, and sells, and that market has been very light.
So I have an actual question about rates, I understand the concept that raising rates should lower prices, but that is not happening because of the "lock in effect". Now my question is, which is brought up every now and then, do you think lowering rates would increase inventory enough to lower prices, or would they just continue to skyrocket?
Yes, not a popular opinion here but I am in the camp that lower rates will help unlock more inventory and increase supply faster which will ease prices.. I don't see home prices skyrocketing from these levels in most regions. Remember, about 90% of homeowners have a rate under 6%, 80% under 5%, 60% under 4% and over 20%+ under 3% rate.. majority of home owners can't or won't give up their rates at these levels.. unless a major life event happens and they have to.. More supply = good
This is why I get the idea of raising rates to try and lower prices, which never happened, but now with such low inventory and my budget of $500k and under, any home in that price range is swarmed with 100 people throwing in offers. I just wonder if lowering rates again would make people continue to raise prices
And now the spending on the stock market will spike again.
"indicates one cut coming this year" uh... where did they indicate that? this is what the press conference said: "**We have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent. So far this year, the data have** ***not*** **given us that greater confidence.** The most recent inflation readings have been more favorable than earlier in the year, however, and there has been modest further progress toward our inflation objective. We will need to see more good data to bolster our confidence that inflation is moving sustainably toward 2 percent."
> uh... where did they indicate that? Fed projects one rate cut... https://finance.yahoo.com/video/fed-holds-rates-steady-projects-201400536.html
Pretty consistent…no shocker here. Core cpi/pce both solidly on a downward trajectory, albeit somewhat slow.
Super lame but not shocking
Im pretty sure they need to increase rates and just holding out for the election before a much needed hike. the issue is the feds just holding out for the elections whom ever wins gonna deal with the cramp show to come because of the hold out.
RAISE THE RATES ILL JUST GRIND HARDER.
Maybe he'll drop it by 1.5 to make up for missing the other five rate cuts. 🤔