Fed cut rates by 50 bps to prevent recession, but may lead to stagflation, uncertainty.

From Investing.com: 2024-09-20 15:47:00

The FOMC meeting in September cut rates by 50 bps, leading to projections of the Fed Funds Rate being at 4.4% by the end of the year and 3.4% by 2025. Despite the 2.5% y/y inflation rate, the rate cut aims to prevent a recession, though it may exacerbate issues of stagflation in the future. The budget deficit is up 24% from last year, with $1.049 trillion spent on debt service. As interest rates fall, the Fed seeks to alleviate the burden of surging debt payments for the Treasury. However, long-term effects may lead to higher rates and economic uncertainty through 2025.



Read more at Investing.com: The Fed’s Rate Cut Won’t Be Enough for a Soft Landing