I was expecting a conservative quarter point reduction, but it seems like the Fed is feeling bullish about inflation and concerned with the labor market, which has cooled much faster than was previously predicted.
What do you think? Will this move come with the positive effects while keeping inflation below 3%?
Agree about the stock markets being overvalued. However, I disagree about the impact of the rate cut on the market. I expect that many investors have been shoveling money into the s&p 500 because it has been the most reliable way to make a return that out paces inflation. As the rate comes down, I’d expect more investors to return to riskier markets and ventures because the opportunity cost is lower and the potential returns are worth it.
Cutting the rate gives CFOs some breathing room, which could go a long way toward creating some new jobs.