FED keeps interest rates 4.25-4.5

[takuma sato]

Why do you think Powell isn't lowering interest rates? According to truflation measurements, inflation is already collapsing, so why wait more to lower rates? They do not trust truflation measurements?

In my opinion, we have 2 scenarios:

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher
2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

[avikz]

I think the main reason for not reducing inflation rate is that, they want to ensure that the inflation numbers are not rebounding.

It is easy to reduce the rate but what after that? I am sure they are maintaining caution here. FED and Powell wants to see the numbers stabilizing before taking the next step. That's normal!

Hurrying into reducing the interest rate, may backfire. I guess they are taking wait and watch approach before taking further decisions on the interest rate.

[Fortify]

Why do you think Powell isn't lowering interest rates? According to truflation measurements, inflation is already collapsing, so why wait more to lower rates? They do not trust truflation measurements?

In my opinion, we have 2 scenarios:

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher
2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

Why do you seem to trust truflation so much.. they're a start up that has existed for barely four years now and doesn't have any particular credibility. In the time that they've existed they've had all sorts of volatility in inflation and interest rates. There are a million people out there who claim to be experts at economics and so many of them get predictions wrong all the time. It is the very job of the central bank of America to predict these things and they've been doing a reasonable job of it (of course dropping the ball in scenarios like the 2008 financial crisis but these things can explode out of nowhere). The fed has a lot better visibility and resources to devote the monitoring the situation than this startup which is still going through rounds of begging for money to continue.

[The Sceptical Chymist]

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher

The Fed has always been slow and very reluctant to pull the trigger when it comes to changing the interest rate, and since inflation has dropped since spiking in 2022 I don't think they want to make too many cuts too soon and thereby produce some unintended consequences (like an even bigger stock market boom than we've had, except with a major crash shortly to follow).

But you know what?  I'm guessing the Fed takes many different factors into consideration, and I'm sure I don't know all of them--probably true for most members here as well.  So this is a question that only produces a guessing game.

2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

Not quite sure I understood the logic of that.

There are a million people out there who claim to be experts at economics and so many of them get predictions wrong all the time.

So true; academics and a lot of other people treat economics as though it were a science--but it isn't.  Far from it.  If you ask 10 economists a question, you'll get 11 different answers.  Lol.

[Wind_FURY]

Why do you think Powell isn't lowering interest rates? According to truflation measurements, inflation is already collapsing, so why wait more to lower rates? They do not trust truflation measurements?

In my opinion, we have 2 scenarios:

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher

2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

Or,

3. Like what the Federal Reserve, and its past Chairmans, has done before - They are always too late in re-adjusting their policies, therefore the "counter-re-adjustment" was always extreme.

Before the pivot to real Quantitative Easing + BRRRRR Money Printing, the economy had to crash first. It will happen again. The inflation rate is not the indicator of the pivot, it's the unemployment rate. If it's low and on a stable level, then no QE. If it surges, the Federal Reserve will call an emergency meeting and turn on the money printer.

[Free Market Capitalist]

You are missing the main point here. Powell kept interest rates at that level but he gave a nod to the economy by pausing the balance sheet reduction.

Fed Slows Balance Sheet Reduction to $5 Billion Amid Debt Ceiling Standoff

He lowered it from $25B to $5B monthly, which the market took with optimism and that is why the stock markets rose yesterday. He also said that he still sees a couple of cuts this year.

What more do you want? He is the chair of the FED, if he sneezes the world gets the flu, so even small gestures like these are positive.

[Swordsoffreedom]

I think the main reason for not reducing inflation rate is that, they want to ensure that the inflation numbers are not rebounding.

It is easy to reduce the rate but what after that? I am sure they are maintaining caution here. FED and Powell wants to see the numbers stabilizing before taking the next step. That's normal!

Hurrying into reducing the interest rate, may backfire. I guess they are taking wait and watch approach before taking further decisions on the interest rate.

In today's  statement , the Fed also emphasized that Trump's tariff war is one of the causes of inflation and as we all see. Trump has no intention of stopping the tariff war anytime soon, and he may even make things worse in April by announcing more tariffs on April 2. Therefore,  the Fed's caution and decision not to rush to cut interest rates soon is reasonable and understandable.

Moreover, the Fed not cutting interest  rates was expected , which is no surprise  and that is why the market  remained optimistic and rallied despite the interest rates remaining unchanged.

[Dunamisx]

Why do you think Powell isn't lowering interest rates? According to truflation measurements, inflation is already collapsing, so why wait more to lower rates? They do not trust truflation measurements?

In my opinion, we have 2 scenarios:

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher
2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

Interest rate is what determines for inflation rate to either lower or increases, while the government have their own way of influencing on this to make it more of their own benefits at the expense of the people through inflation, the masses have no alternative than to take whatever comes as a result, while the manipulation is been done within their own circles at the top.

[avikz]

I think the main reason for not reducing inflation rate is that, they want to ensure that the inflation numbers are not rebounding.

It is easy to reduce the rate but what after that? I am sure they are maintaining caution here. FED and Powell wants to see the numbers stabilizing before taking the next step. That's normal!

Hurrying into reducing the interest rate, may backfire. I guess they are taking wait and watch approach before taking further decisions on the interest rate.

In today's  statement , the Fed also emphasized that Trump's tariff war is one of the causes of inflation and as we all see. Trump has no intention of stopping the tariff war anytime soon, and he may even make things worse in April by announcing more tariffs on April 2. Therefore,  the Fed's caution and decision not to rush to cut interest rates soon is reasonable and understandable.

Moreover, the Fed not cutting interest  rates was expected , which is no surprise  and that is why the market  remained optimistic and rallied despite the interest rates remaining unchanged.

That absolutely makes sense! If Trump continues his tariff war, that will not be great for the US economy. The US stock market is crashing due to the uncertainty around the tariff situation. So FED has a lot of watch out for.

But I understand Trump's view. He is an US nationalist. He wants to level the playing ground to create equal opportunity. But I am sure that will also open opportunities for countries like China.

[Fortify]

Why do you think Powell isn't lowering interest rates? According to truflation measurements, inflation is already collapsing, so why wait more to lower rates? They do not trust truflation measurements?

In my opinion, we have 2 scenarios:

1) They legitimately think that interest rates are at a sweet spot that is working to lower inflation, or at least keep it from going any higher
2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

This was the best that could be hoped for at the moment, inflation was on a downward trajectory and if it kept going would have allowed them to drop it further, but the politics in America are too volatile right now. Markets like stability and predictability, but Trump has made so many rash decisions lately it is undermining confidence. You can see it in the decline of the stock market, companies don't know if their supply chain will exist in future or be wiped out by extra costs. People are also scared that they might not have a job next year due to the random decisions that seem to come out of the White House, since both houses in government are too scared and weak to stand up to the President.

[DeathAngel]

Powell always reacts late, I think it’s stupid to be honest. They should be cutting rates now but I genuinely think that they believe they are doing the right thing. They are always too risk averse & side with caution, which ultimately usually means they are being reactive to situations rather than proactive.

[takuma sato]

2) They are manufacturing a controlled demolition: They just want the debt to be refinanced at higher interest and cause a recession, this will allow for lower rates and lower inflation.

The logic is that since their argument for not wanting to lower interest rates is that they "continue to look at the data" and apparently the data is telling them to not lower interest rates, then they have no justification to do so, so if there was a recession, then that would be the justification to lower interest rates since it would be by popular demand and they wouldn't look bad doing it. If they were to lower it now and inflation went up again, then they would look bad. If they cut into a hard landing, then they are just doing it as a last resort. And right now it just looks like Trump and Powel are fighting over the decision. If Powel does it he may look like he is doing what Trump is saying and viceversa so there are many angles to this thing. I just think that inflation is now on a spot where they could do with some rates, but perhaps Trump's tariffs have scared them again due possible inflation.

[Wind_FURY]

You are missing the main point here. Powell kept interest rates at that level but he gave a nod to the economy by pausing the balance sheet reduction.

Fed Slows Balance Sheet Reduction to $5 Billion Amid Debt Ceiling Standoff

He lowered it from $25B to $5B monthly, which the market took with optimism and that is why the stock markets rose yesterday. He also said that he still sees a couple of cuts this year.

What more do you want? He is the chair of the FED, if he sneezes the world gets the flu, so even small gestures like these are positive.

Jerome Powell still wants to get his "Soft Landing", and in my own belief, he might not get it. Why? Because there's still a possibility that, in the current state of the economy, a recession might happen. Currently it's still doing "OK", but wait two quarters and wait for the GDP report. But more importantly, keep monitoring the Unemployment Rate.

Plus how many times did the Federal Reserve actually achieve a "soft landing"?

  ¯\_(ツ)_/¯

[bitgolden]

At the moment? Because if they do, inflation will increase again. Inflation hasn't passed yet, the lower rates and higher rates work together to keep inflation and debt accordingly. You keep it at exact sweet spot where you could print money to pay your debt, while also not increasing inflation too much.

If you print a lot, and lower the interest rates, then inflation will go up, if you print none then you can't pay the debt, if you increase the rates too much, then you risk recession. They believe they are at a good sweet spot with 4.5 or there about rates. If they lower it right now, they can't print more, because that would cause inflation, and looking at the tariff situation, inflation may happen, so they can't lower it at the moment.