Sept. 18 (UPI) — The Federal Reserve will announce an interest rate decision on Wednesday afternoon as it is widely expected to cut interest rates for the first time in four years. The burning question surrounding an interest rate cut as the Federal Open Market Committee concludes its meeting is, “Will they or won’t they and by how much?”
While Fed Chair Jerome Powell has strongly hinted that the board will likely cut rates for as a way to control inflation in his 2 p.m. EDP press conference, debate has raged on if the cut will be the traditional one-quarter of a percent or a heftier one-half point.
“I hope they cut 50 basis points, but I suspect they’ll cut 25,” Mark Zandi, chief economist at Moody’s Analytics, said, according to CNBC.
“They have achieved their mandate for full employment and inflation back at target, and that’s not consistent with a five-and-a-half percent-ish funds rate target. So, I think they need to normalize rates quickly and have a lot of room to do so.”
But the traditional data the Feds watch to determine if and how much to cut interest rates has given the board a mixed bag. While inflation is down sharply from its COVID-19 pandemic high of 9.1%, its current 2.5% remains off the Fed benchmark growth of 2%.
While hiring in the country has slowed, the unemployment rate remains low at 4.2%.
According to the latest consumer price index, housing continued to be a major driver of rising prices jumping 0.5% in August while prices in the core items – minus energy and food – increased by 0.3% last month.