While Cohn said the Fed’s decision was unsurprising, she questioned the merit of a jumbo cut. “The American public did not get the reactions in the bond market that it was expecting. I think it probably was not the right move,” she said.
“This was the first rate cut in what will be a rate-cutting cycle, according to [Fed chair Jerome] Powell, probably for the next 16 months, 18 months. By making such a bold move, does it say that they were behind the eight-ball in terms of dealing with employment, because we’ve had three months of poor employment data? Are they just trying to prop up the stock market?”
In remarks after the Fed announcement, Powell was keen to pour cold water on the notion that oversized cuts could become the norm for the Fed as it embarks on the path to lower rates.
He said the Fed’s Summary of Economic Projections (SEP), which maps out members’ sentiments on the likely direction of the economy, gave no indication that its committee was “in a rush” to reduce rates dramatically.
Breaking News: The US Federal Reserve has cut interest rates by 0.5% for the first time in four years, bringing the overnight rate to 4.75-5%.
Read more: https://t.co/mVQLLgWuvg
— Mortgage Professional America Magazine (@MPAMagazineUS) September 18, 2024
The economy remains in “good shape,” according to Powell, growing at a solid clip with inflation continuing to regress and little chance of a downturn in the months ahead.