Fed Cuts Rates By 50 Bps, Now What?
Summary
- The Fed cut interest rates by 50 bps in September, anticipating no further meetings until November, aiming to counter a slowing economy and soft labor market.
- Updated Fed projections show higher unemployment and lower inflation expectations, with interest rates expected to drop further, indicating more rate cuts this year.
- Despite softening economic data, the Fed doesn't foresee a recession, though historical inaccuracies in recession predictions warrant caution.
- Stock market valuations are high, driven by multiple expansion rather than earnings growth; consider protective hedges like put options while remaining invested.
Wysiati
September 18 was a highly anticipated date, as the Fed was expected to cut interest rates for the first time since 2020. The only question was whether the size of the cut would be 25 bps or 50 bps. It turned
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