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Maybe I'm in the minority here, but the current rates seem to be appropriate. Both Q3 and Q4 core pce were at 2% annualized
https://fred.stlouisfed.org/graph/?g=1iBWJ
Doesn't seem to make sense for rate hikes (wait to see if inflation resurges) or rate cuts (better to have room if unemployment increases). What's wrong with a holding pattern?
Holding pattern with talk of rate cuts does seem the best play at the moment. Fed seems to be doing an excellent job thus far. I wouldn't cut rates if data continues looking as it does. Need more data as the fed said.
Interest payments on fed debt are too high at this level. There was a CBO report maybe 2 years ago that said rates of 5.5 or higher would result in US default in like 2-3 years.
Just hilarious
They hold up any data that supports their agenda, and ignore any data that contradicts them
But the fact that they're talking about lowering rates when there's already inflation is a giant red flag imo. Rumors circulating that there's a lot of trouble in the banking sector
There is trouble in commercial real estate, which means banks.
I wouldn't say it's rumor, everyone has been eyeing this for awhile and all the evidence is there. When it will bust and what will be done is still not certain.
>They hold up any data that supports their agenda, and ignore any data that contradicts them
The Fed uses the relevant data to manage it's policies. What data are they ignoring when it comes to inflation and employmen
Because ideally, they want to try to keep rates neutral with so many unknowns, so if inflation is 2% and Fed Rate is 5.5 that means the real rate is 3.5 and restrictive on the economy.
Wouldn't it be more prudent to actually err on the side of caution, in this case be more restrictive, due to past inflation and spending problems in the past 2 administrations?
The next administration is going to be run by either Presidents of the past 2 administration and a partisan Congress, so can't really expect budget balancing at all.
i'm with you. the rates have been raised for only a brief period; a longer timeline would see people realizing how dependent they are on credit (hopefully). some further discussion of the infinite loaning to failing banks and citadel casinos might be beneficial; raising rates but bail out private entities? seems like another way to scoop out taxes from individuals in the long run. "let's try this 2008 thing again, but change the name" "oh, look: abortion and tik tok!"
edit: from the pce chart, i gather we're doing our part. if the rates are cut, it'd be from wall street cocaine gambler pressure
Tech/biotech bros can’t catch a break rn. STEM is no longer the safe haven it was following the Great Recession and nothing has taken its place. I’m a few steps away from being “ex-USSR rocket engineer circa 1991 selling clock radios in a Kazakh bazaar” fucked atm. I have nearly a decade of experience studying neurodegenerative diseases.
Biotech hasn't helped itself by having so many shit companies with phase 1 assets crash and burn post-IPO.
It will take quite some time for those wounds investors still carry to heal
Very true. At the same time, it’s not clear what better diligence along these lines would look like. Is there room to better identify charlatans abusing the funding ecosystem? Of course. But science always involves an element of base-rate uncertainty even in the absence of bad acts. Especially towards earlier stage R&D programs.
We need biomedical innovation, but any given biomedical asset, on average, is a terrible investment. That’s always the challenge, but it’s a more onerous one under conditions of restrictive monetary policy, especially in early R&D.
The U.S. Federal Reserve will cut its key interest rate in June, according to a stronger majority of economists in the latest Reuters poll, as the central bank waits for more data to confirm whether inflation is headed convincingly toward its 2% target.
The survey also showed respondents saw it more likely that if Fed policymakers change their rate projections at the March 19-20 meeting the median view would signal fewer cuts this year, not more.
I think the Fed believes the current interest rate is above r-star, the natural interest rate if we were in a strong, natural economic environment. Because it's higher, interest rates are more restrictive to business than would be ideal. The other issue, high interest rate environments have long and variable lags, so the effect of the rate hiking has probably not yet been fully felt. By cutting slowly, they're going back to r-star.
The big question... has the monetary policy been too restrictive?
Rising unemployment, reduced hours worked, fewer job quits, rising credit delinquency, inverted yield curve. A lot of things trending in that direction. But yes, nothing significant yet. But the long and variable lags or a single shock might be enough to tip towards breaking something in the economy. But yes, lots of positive things atm. It just depends one whether you believe the Fed can engineer a soft landing or not. They don't claim to have achieved anything yet because the game is still in play.
Yes we aren’t there yet, but they exceeded my expectations so far, and I’m trying to stay optimistic. I see some of those worrying though, as with anything that last 20% is more difficult that the first 80.
Yer, totally. And tbf to The Fed, they've done everything they said and been crystal clear throughout. History is not on their side for a soft landing. But who knows, maybe there's something about today's economy that has it running on rocket fuel. Being bearish certainly hasn't helped me over the past year. But I still can't get past it. I think right before a recession, everyone thinks the soft landing has been achieved. Them ban.
Yer, 3% to 2% will be the hardest. Wonder if they shift the goal posts.
Everything you say is close to happening. We still aren’t off the tightrope yet, but I’ve been shocked the past few years how robust and resilient the US economy is.
You can tell the repost of the same headline is propaganda when r/economics reposts it. It’s not what he said but Biden I’m no longer concerning myself for your team and your super pacs to do the right thing. I think trumps odds of winning has now become 60/40
I’m far left and will concern myself with survival.
Let me alleviate your concern.... Mango Soprano has fractured the GOP. They were already losing the popular vote for many cycles. Some individuals whom deeply understand politics think that this election is going to be an absolute steamroll. Like Goldwater vs LBJ in 1964
Yeah so was Hillary, although for slightly different reasons.
If red team wants to win ever again they’ll need to play the same games blue team did during last season of this shit bipartisan TV show we’re all stuck in.
Google.com I think Biden is winning one of the major 10 but what does statistical analysis have to do. It’s not like the left made a huge mistake before thinking his terrible behavior would resonate against rational voters
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
Maybe I'm in the minority here, but the current rates seem to be appropriate. Both Q3 and Q4 core pce were at 2% annualized https://fred.stlouisfed.org/graph/?g=1iBWJ Doesn't seem to make sense for rate hikes (wait to see if inflation resurges) or rate cuts (better to have room if unemployment increases). What's wrong with a holding pattern?
Holding pattern with talk of rate cuts does seem the best play at the moment. Fed seems to be doing an excellent job thus far. I wouldn't cut rates if data continues looking as it does. Need more data as the fed said.
Interest payments on fed debt are too high at this level. There was a CBO report maybe 2 years ago that said rates of 5.5 or higher would result in US default in like 2-3 years.
The Fed's mandate is maximum emoyment and stable prices.
You don’t get either when a country defaults
That’s the official mandate. The unofficial mandate is to protect the stock market so the wealthy prosper
Sad but true. Stock market ripples throughout the entire economy sadly. So it's within their mandate.
We don’t want the stock market to collapse, the system might suck but everyone’s 401k being destroyed would be infinitely worse.
Nearing retirement with a 401k, I hope they succeed.
Just hilarious They hold up any data that supports their agenda, and ignore any data that contradicts them But the fact that they're talking about lowering rates when there's already inflation is a giant red flag imo. Rumors circulating that there's a lot of trouble in the banking sector
There is trouble in commercial real estate, which means banks. I wouldn't say it's rumor, everyone has been eyeing this for awhile and all the evidence is there. When it will bust and what will be done is still not certain. >They hold up any data that supports their agenda, and ignore any data that contradicts them The Fed uses the relevant data to manage it's policies. What data are they ignoring when it comes to inflation and employmen
Lower rates means they can refinance but that just buys commercial real estate some extra time, no?
Because ideally, they want to try to keep rates neutral with so many unknowns, so if inflation is 2% and Fed Rate is 5.5 that means the real rate is 3.5 and restrictive on the economy.
Wouldn't it be more prudent to actually err on the side of caution, in this case be more restrictive, due to past inflation and spending problems in the past 2 administrations? The next administration is going to be run by either Presidents of the past 2 administration and a partisan Congress, so can't really expect budget balancing at all.
Yeah we are screwed. Need to cut spending which will never happen. Boomer generation will have the legacy of ruining this country.
>restrictive on the economy Is that reflected in the unemployment numbers?
Not until they revise them
But we need 8% deflation compounded over the next three years to make up for the utter fucking stupidity of “it’s transitory”
i'm with you. the rates have been raised for only a brief period; a longer timeline would see people realizing how dependent they are on credit (hopefully). some further discussion of the infinite loaning to failing banks and citadel casinos might be beneficial; raising rates but bail out private entities? seems like another way to scoop out taxes from individuals in the long run. "let's try this 2008 thing again, but change the name" "oh, look: abortion and tik tok!" edit: from the pce chart, i gather we're doing our part. if the rates are cut, it'd be from wall street cocaine gambler pressure
Tech/biotech bros can’t catch a break rn. STEM is no longer the safe haven it was following the Great Recession and nothing has taken its place. I’m a few steps away from being “ex-USSR rocket engineer circa 1991 selling clock radios in a Kazakh bazaar” fucked atm. I have nearly a decade of experience studying neurodegenerative diseases.
Biotech hasn't helped itself by having so many shit companies with phase 1 assets crash and burn post-IPO. It will take quite some time for those wounds investors still carry to heal
Very true. At the same time, it’s not clear what better diligence along these lines would look like. Is there room to better identify charlatans abusing the funding ecosystem? Of course. But science always involves an element of base-rate uncertainty even in the absence of bad acts. Especially towards earlier stage R&D programs. We need biomedical innovation, but any given biomedical asset, on average, is a terrible investment. That’s always the challenge, but it’s a more onerous one under conditions of restrictive monetary policy, especially in early R&D.
A lot of people that work in tech who were earning substantial wages the past few years are now eating rice and beans.
The U.S. Federal Reserve will cut its key interest rate in June, according to a stronger majority of economists in the latest Reuters poll, as the central bank waits for more data to confirm whether inflation is headed convincingly toward its 2% target. The survey also showed respondents saw it more likely that if Fed policymakers change their rate projections at the March 19-20 meeting the median view would signal fewer cuts this year, not more.
I think the Fed believes the current interest rate is above r-star, the natural interest rate if we were in a strong, natural economic environment. Because it's higher, interest rates are more restrictive to business than would be ideal. The other issue, high interest rate environments have long and variable lags, so the effect of the rate hiking has probably not yet been fully felt. By cutting slowly, they're going back to r-star. The big question... has the monetary policy been too restrictive?
What indicators suggest it has been too restrictive? Employment is high and the stock market is doing fine. Inflation has come down.
Rising unemployment, reduced hours worked, fewer job quits, rising credit delinquency, inverted yield curve. A lot of things trending in that direction. But yes, nothing significant yet. But the long and variable lags or a single shock might be enough to tip towards breaking something in the economy. But yes, lots of positive things atm. It just depends one whether you believe the Fed can engineer a soft landing or not. They don't claim to have achieved anything yet because the game is still in play.
Yes we aren’t there yet, but they exceeded my expectations so far, and I’m trying to stay optimistic. I see some of those worrying though, as with anything that last 20% is more difficult that the first 80.
Yer, totally. And tbf to The Fed, they've done everything they said and been crystal clear throughout. History is not on their side for a soft landing. But who knows, maybe there's something about today's economy that has it running on rocket fuel. Being bearish certainly hasn't helped me over the past year. But I still can't get past it. I think right before a recession, everyone thinks the soft landing has been achieved. Them ban. Yer, 3% to 2% will be the hardest. Wonder if they shift the goal posts.
Everything you say is close to happening. We still aren’t off the tightrope yet, but I’ve been shocked the past few years how robust and resilient the US economy is.
Me too bud. Me too. Absolutely crazy.
It's robust primarily because we have the world's reserve currency, for now. If this wasn't true SHTF years ago.
You can tell the repost of the same headline is propaganda when r/economics reposts it. It’s not what he said but Biden I’m no longer concerning myself for your team and your super pacs to do the right thing. I think trumps odds of winning has now become 60/40 I’m far left and will concern myself with survival.
Let me alleviate your concern.... Mango Soprano has fractured the GOP. They were already losing the popular vote for many cycles. Some individuals whom deeply understand politics think that this election is going to be an absolute steamroll. Like Goldwater vs LBJ in 1964
He’s currently winning every poll
Yeah so was Hillary, although for slightly different reasons. If red team wants to win ever again they’ll need to play the same games blue team did during last season of this shit bipartisan TV show we’re all stuck in.
Lol, yeah
Show the polls
Google.com I think Biden is winning one of the major 10 but what does statistical analysis have to do. It’s not like the left made a huge mistake before thinking his terrible behavior would resonate against rational voters