Federal Reserve officials are considering cutting interest rates for the first time since the pandemic as they shift focus from inflation to a weakening job market. Unemployment has risen to 4.1%, hiring has slowed, and more workers are facing long-term unemployment. Additionally, inflation has dropped to 2.5%, below the Fed’s target of 2%. Former Fed officials are calling for a rate cut sooner rather than later to prevent economic damage. Wall Street traders predict a rate cut in September, but others argue for a quicker timeline. Companies in sectors sensitive to interest rates and consumer credit, such as housing and automotive, have shown weakness and are expecting sales to improve if rates are lowered. The Fed will announce the results of their meeting on Wednesday, with expectations of a rate cut to prevent negative economic outcomes and stimulate growth in affected industries.
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