its first cut in four years. This is no minor policy tweak. Since 2000, rate cuts of this size were previously made during the pandemic lockdowns in 2020, the global financial collapse of 2007-08, and the dot-com crash of 2001-02.And Until this move, the Fed used high rates to cool the once-overheated economy. You might recall that in March 2022, the Fed began a battle against four-decades-high inflation with pricier financing.
Schniepp suggests California job growth would be better if employers statewide had more qualified candidates from which to choose. Lower interest rates won’t alter that shortage. Still, what about inflation? A reheated economy will boost prices, he says. Plus, huge government deficits and the borrowings required to fill those financial gaps will put upward pressures on inflation and interest rates.