Fed Approves 3rd Rate Cut of 2025 - CNBC The Federal Reserve lowered interest rates by a quarter percentage point to 3.5%-3.75%. This carries caution flags about where policy is headed from here and featured “no” votes from three members, which hasn’t happened since September 2019. The 9-3 vote featured hawkish and dovish dissents – Governor Stephen Miran favored a steeper half-point reduction while regional Presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago backed holding the line. The hawks are generally more concerned about inflation and favor higher rates while doves focus on supporting the labor market and want lower rates. Stocks rose following the decision, with the Dow Jones Industrial Average adding 500 points. Treasury yields moved mostly lower. Fed Chair Jerome Powell added, “We haven’t made any decision about January, but as I said, we think we’re well positioned to wait and see how the economy performs.“ On the economy, the committee raised its collective view of gross domestic product growth for 2026, boosting its September projection up by half a percentage point, to 2.3%. The committee continues to expect inflation to hold above its 2% target until 2028. On inflation, prices remain high, with the Fed’s preferred gauge putting the annual rate at 2.8% in September which is north of the central bank’s 2% target. Lastly, the Fed announced it will resume buying Treasury securities. Powell is nearing the end of his second term as chair, and Trump has signaled he will litmus test his choice, using a preference for lower rates as a barometer, rather than someone committed to the Fed’s dual mandate of stable prices and full employment. Prediction markets are betting the nominee will be National Economic Council Director Kevin Hassett, who is viewed as a Fed chair that will do Trump’s bidding. How it impacts you? The Fed cut rates again to stimulate more spending. This is not a good long term sign because if the citizens are not spending, that means they’re scared. If they’re scared financially, then we need to keep a close eye on the economy especially as Trump favors lower rates. Last time we lowered rates rapidly, it was during the Great Recession and Pandemic Recession. Let that sink in. US Unemployment Rate Rises to 4-year High - Time The unemployment rate rose to a four-year high of 4.6%—the highest since September 2021, when the nation was bouncing back from the COVID-19 pandemic lockdown. Economists note the report showed that wages are growing at the lowest rate in years. Although Americans’ earnings are still outpacing inflation, average hourly earnings grew at an annual rate of 3.5% in November, whereas inflation grew at a 3% rate in September, marking the slowest pace since 2021. Jeffrey Roach, chief economist at LPL Financial, said “The affluent are fine, if not thriving, while lower income households struggle with high rent payments, rising delinquencies, and job uncertainty.” How it impacts you? This coupled with a lower interest rate are not good signs. Last time we had a cross-over (or almost cross-over) where unemployment rates rose and the Federal Interest Rate decreased was, again, during the Great Recession and Pandemic Recession. Thanks for reading Bitcoinomics21! Please share this post with everyone This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit bitcoinomics21.substack.com
