As the article states the Fed has to balance two mandates, controlling inflation and strong employment. Unfortunately as is often the case in life these 2 goals are sometimes at odds with each other. The Fed also has limited and very crude tools at its disposal. If employment numbers looked good and inflation was not at the goal rate then we likely would not have seen an interest rate cut, but employment numbers have been weak and look to be trending worse so we get a 1/4 point cut hoping the spur to employment will outweigh the effect on inflation.
Wait, so the inflation is at 3% (above the 2% goal) and they cut the rate? Does it make sense?
As the article states the Fed has to balance two mandates, controlling inflation and strong employment. Unfortunately as is often the case in life these 2 goals are sometimes at odds with each other. The Fed also has limited and very crude tools at its disposal. If employment numbers looked good and inflation was not at the goal rate then we likely would not have seen an interest rate cut, but employment numbers have been weak and look to be trending worse so we get a 1/4 point cut hoping the spur to employment will outweigh the effect on inflation.
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