"...boosted expectations that the Federal Reserve will cut interest rates in September to stimulate the economy"
The new unemployment rate is 4.3% That's above the Fed's 4% target for full employment, but not all that high above it.
By contrast, inflation is about 3% -- a full percentage point above the target of 2%, and 50% higher.
Lowering target rates is supposed to lower unemployment and raise inflation. Once you hit full employment, additional money for wages increases money supply without increasing product supply.
The Fed, of course, has more precise models than I've just described. But these numbers suggest to me that the Fed should leave rates as they are; they aren't any kind of emergency or pending emergency. The market is at or near record highs; it doesn't need its bubble expanded.
I know the the Fed is under political pressure because politicians like soaring stock markets. And the pressure is now verging on threats. But it still seems unlikely that the Fed will cave quite so soon when the numbers say to do just the opposite.
The new unemployment rate is 4.3% That's above the Fed's 4% target for full employment, but not all that high above it.
By contrast, inflation is about 3% -- a full percentage point above the target of 2%, and 50% higher.
Lowering target rates is supposed to lower unemployment and raise inflation. Once you hit full employment, additional money for wages increases money supply without increasing product supply.
The Fed, of course, has more precise models than I've just described. But these numbers suggest to me that the Fed should leave rates as they are; they aren't any kind of emergency or pending emergency. The market is at or near record highs; it doesn't need its bubble expanded.
I know the the Fed is under political pressure because politicians like soaring stock markets. And the pressure is now verging on threats. But it still seems unlikely that the Fed will cave quite so soon when the numbers say to do just the opposite.