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Fed funds cut with charts
Investment Analysis Clubs
Macro Economic Trends and Risks
Sep 17
1m ago
WendyBG
1m
The Wells Fargo economists just published a good analysis of today’s fed funds cut with good charts.
wellsfargo.bluematrix.com
Wells Fargo - September FOMC: A "Risk Management" Cut
Inflation is still too high and rising. The unemployment rate is low but slowly rising.
The dot plot and forecast show a gradual reduction of the fed funds rate rather than the sudden extreme cuts from previous cycles – which is what President Trump wants.
I don’t see any reason to cut the fed funds rate at all. The Federal Reserve has said that they want a “neutral” rate which neither slows nor stimulates the economy. There’s no sign that the current fed funds rate is slowing the economy.
https://www.wsj.com/opinion/donald-trump-federal-r...
It’s Trump’s Federal Reserve Now
The President gets his interest-rate cut—and all that comes with it.
By The Editorial Board, The Wall Street Journal, 9/17/2025
…
In their Summary of Economic Projections (SEP) released after this week’s meeting, Fed officials anticipate two more 25-point rate cuts this year and another in 2026. Yet the same SEP projections concede that inflation is proving more persistent than anticipated….
Chairman Jerome Powell and colleagues are shifting their main policy focus from inflation to the slowing labor market. Mr. Powell in his press conference described this week’s decision as a “risk-management cut” and emphasized evidence of softness in job creation.
But he struggled to articulate how monetary policy might make a difference. Neither of the negatives he mentioned—tariffs and Mr. Trump’s immigration crackdown—can be offset by lower interest rates. Otherwise, “it’s not a bad economy,” he allowed. Booming stock valuations and investor enthusiasm for low-quality debt, among other symptoms, suggest financial conditions aren’t especially tight as it is…
Coupled with those inflation projections, the message is that the Fed will tolerate higher inflation for longer to take pre-emptive action to shore up an economy that may or may not need the help…. [end quote]
Financial conditions aren’t just “not especially tight as it is” – they are very loose. The Fed is feeding the markets with the crack cocaine of cheap money that traders crave and lead to inflation in asset prices which puts housing out of reach for ordinary working people. Their forecast is gradual cuts but Trump will continue to push for extreme cuts.
https://www.chicagofed.org/research/data/nfci/curr...Wendy
