Yesterday, the Federal Reserve lowered rates once again, with the Fed funds target rate now 3.75%, the lowest it’s been since November of 2022.
But the vote to cut wasn’t unanimous, with three dissenters, and a number of “silent” dissenters who opposed a cut but weren’t part of the voting committee membership. Two public dissenters, Austan Goolsbee, President of the Chicago Federal Reserve Bank, and Jeffrey Schmid, President of the Kansas City Federal Reserve Bank, thought the rate should be held steady in the face of inflation threats, while Federal Reserve Board Governor Stephen Miran dissented in favor of a deeper cut in rates.
During the press conference following the Federal Open Market Committee’s meeting and rate cut decision, Chairman Powell explained to reporters that the decision was a close one, and that he could have made the case for not cutting. Ultimately, though, Powell and the FOMC were pushed toward a cut by weaker labor data. This, explained Powell, was why he changed course after sending a soft signal in October that the December meeting would result in a holding of rates.
Going forward, the FOMC has signaled that there could be one more cut in 2026. Maybe that will be the end of them. Your Survival Guy is not in favor of rate cuts, which hurt investors looking for a fixed income. Those investors shouldn’t be forced into buying stocks because they’re the only game in town.
Action Line: When you want to talk about the Fed’s moves and bonds in your portfolio, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
