With the Fed poised to cut rates for the first time in years, what have we learned about the economic disruptions of the pandemic era?
by John Cassidy
The New Yorker
It was easy to miss in all the hubbub over the Presidential debate and Donald Trump chickening out of a rematch, but there was some significant economic news last week. The Labor Department announced that the rate of inflation fell to 2.5 per cent in August, the lowest level since February, 2021. After this positive development, Jerome Powell and his colleagues at the Federal Reserve are set to cut interest rates on Wednesday.
Assuming the rate reduction goes ahead, it will be the first one since March, 2020, when, amid the outbreak of the COVID-19 pandemic, the Fed tried to cushion the economy by slashing the federal-funds rate all the way to zero. Two years later, the central bank reversed course to head off rising inflation. It ended up hiking rates no fewer than eleven times. On Wall Street, analysts are busy debating whether this week’s cut will be a quarter point or half a point, but that’s a bit like squabbling about whether Aaron Judge will hit the next pitch over the left-field fence or the right-field fence at Yankee Stadium.