I don't see this posted. I guess the focus has been on the elections and shutdown.

Powell dropped the rate 0.25 in October, range now 3.75% to 4.00%. CPI is up YoY to 3% in September, rising every month since April.

I guess 3% is the new 2%.


Good news for seniors; SS is tied to CPI so you'll get a bigger bump than last year:

"2026 COLA: Announced October 24, 2025, at 2.8%, adding ~$56/month on average (to ~$1,983). This affects nearly 71 million beneficiaries and starts January 2026 (or December 31, 2025, for SSI's 7.5 million recipients)."

They have a dual mandate between maximum employment and 2 percent inflation target. Right now those markers are splitting. Inflation is still relatively high while employment is sluggish. If they respond one way, one thing may get worse. Vice versa.

They're taking a limited approach and trying to split the baby. Right now they think their current rates are actually still a little bit moderately restrictive on the economy because they are still worried about inflation. Most analysts believe a lot of the CPI is one-time tariff related and once those tariffs get baked in we should start to see it cool off next year. Most of the board believes a neutral rate target is somewhere around 3%.

The Fed already indicated if they don't see a cool off in inflation this quarter they may not cut rates again until next year.

There's a split amongst the members. One dissent in either direction at the last meeting which is pretty rare.

Trump will get his fed board appointed next year and will push a bunch of people who will cut rates to near zero again. People will celebrate it because it's Donald Trump and people don't really analyze anything he does based on a lens of pragmatics but rather whether you like him as a politician or not. Trump doesn't give two craps about inflation. He wants the cheap money to flow.

Put me in the camp that thinks rates need to be lowered and that the last few months' increases in CPI are due to tariffs (a mostly 1-off event) and not due to overheating of the economy (too much demand). Just look at the job market. Does that look like an economy that is running too hot? Yeah, I didn't think so.

AtticusMatlock said:

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They have a dual mandate between maximum employment and 2 percent inflation target. Right now those markers are splitting. Inflation is still relatively high while employment is sluggish. If they respond one way, one thing may get worse. Vice versa.

They're taking a limited approach and trying to split the baby. Right now they think their current rates are actually still a little bit moderately restrictive on the economy because they are still worried about inflation. Most analysts believe a lot of the CPI is one-time tariff related and once those tariffs get baked in we should start to see it cool off next year. Most of the board believes a neutral rate target is somewhere around 3%.

The Fed already indicated if they don't see a cool off in inflation this quarter they may not cut rates again until next year.

There's a split amongst the members. One dissent in either direction at the last meeting which is pretty rare.

Trump will get his fed board appointed next year and will push a bunch of people who will cut rates to near zero again. People will celebrate it because it's Donald Trump and people don't really analyze anything he does based on a lens of pragmatics but rather whether you like him as a politician or not. Trump doesn't give two craps about inflation. He wants the cheap money to flow.

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What does "cheap money to flow" mean for the average, non-401k upper middle class folks?

Well it help bring down prices of groceries or housing, perhaps? Or will it likely be another round of checks mailed to everyone with his signature on them?

It will it do nothing for them?

Whether he does or doesn't get the Fed BOG he wants, the clock is probably ticking on the Federal Reserve with respect to it's current level of power.

Stablecoins will go a long way toward disintermediating the Fed and monetary policy via no longer having dealer banks play such a large role in the monetary policy world.

Stablecoins provide a path for the Treasury to directly influence monetary policy rather than having to rely on the Federal reserve.

javajaws said:

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Put me in the camp that thinks rates need to be lowered and that the last few months' increases in CPI are due to tariffs (a mostly 1-off event) and not due to overheating of the economy (too much demand). Just look at the job market. Does that look like an economy that is running too hot? Yeah, I didn't think so.

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You can have both high inflation and high UE: stagflation. I'm not saying that is happening, but it can and does occur.

Logos Stick said:

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javajaws said:

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Put me in the camp that thinks rates need to be lowered and that the last few months' increases in CPI are due to tariffs (a mostly 1-off event) and not due to overheating of the economy (too much demand). Just look at the job market. Does that look like an economy that is running too hot? Yeah, I didn't think so.

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You can have both high inflation and high UE: stagflation. I'm not saying that is happening, but it can and does occur.

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Not saying that can't happen. But I don't think that is what is currently happening IMO.

That all depends. Lower federal funds rate makes borrowing less expensive which in theory spurs business growth. What we've actually seen with all of the money printing over the last 17 years or so is that the average dollar is actually circulating less in the US economy, not more, which in theory should not be inflationary.

My understanding is a lot of money is being borrowed by big investors to park and hold or to lever PE takeovers. We have half the number of publicly traded firms than we did 20 years ago thanks to private equity buying up a lot of businesses and taking them private with borrowed funds. Thats what cheap loans do. They don't necessarily create more employment, and in fact a lot of layoffs tend to happen following PE acquisitions.

My suspicion is Trump and other people want cheap funds because it makes it easier for their friends and family to acquire businesses with levered funds. It's not necessarily good for the consumer or employment in general.

AtticusMatlock said:

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That all depends. Lower federal funds rate makes borrowing less expensive which in theory spurs business growth. What we've actually seen with all of the money printing over the last 17 years or so is that the average dollar is actually circulating less in the US economy, not more, which in theory should not be inflationary.

My understanding is a lot of money is being borrowed by big investors to park and hold or to lever PE takeovers. We have half the number of publicly traded firms than we did 20 years ago thanks to private equity buying up a lot of businesses and taking them private with borrowed funds. Thats what cheap loans do. They don't necessarily create more employment, and in fact a lot of layoffs tend to happen following PE acquisitions.

My suspicion is Trump and other people want cheap funds because it makes it easier for their friends and family to acquire businesses with levered funds. It's not necessarily good for the consumer or employment in general.

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Well that sucks for the the vast majority of Americans if that's the case.

Appreciate the lengthy response as well.

AtticusMatlock said:

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Lower federal funds rate makes borrowing less expensive which in theory spurs business growth.

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Indirectly maybe but that's not exactly what's happening.

The exact transmission is lower federal funds rate makes it less profitable for banks to hold on to excess reserves. Bank gets a deposit and has to do something with it...

• Risk loaning it out to someone
• Invest it in longer term vehicle with a liquidity risk of not having the funds to redeem the deposit if required
• Invest it in short term vehicle (money market, tbill)
• Lend it out to other banks overnight for clearing liquidity for other banks...this is the one that is zero risk, instant return...albeit small.

A higher FF rate makes the 4th option more attractive and in relation, the others less attractive. So by making the 4th option less attractive, you give banks the option to go with one of the other 3. If they choose #1, that's the option that spurs business growth. The problem with thinking that a lower FF rate will spur business growth is the assumption that there are businesses worth lending to. If you get into a situation (like now) where FF is dropping, but lending standards are rising...you might still not get the lending into the private market that you are after.

+1 to what Sims said.

I actually think there is another effect as well: consumer sentiment. Just lowering rates tends to help with sentiment about the economy in general - to the point it becomes somewhat of a self-fulfilling prophecy.

Raise rates and you can bet its gonna get rocky, regardless of the fundamentals or actual direct effect. The reverse is true as well - lower rates and watch people get hopeful and increase job openings, spending, etc.

No Spin Ag said:

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AtticusMatlock said:

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They have a dual mandate between maximum employment and 2 percent inflation target. Right now those markers are splitting. Inflation is still relatively high while employment is sluggish. If they respond one way, one thing may get worse. Vice versa.

They're taking a limited approach and trying to split the baby. Right now they think their current rates are actually still a little bit moderately restrictive on the economy because they are still worried about inflation. Most analysts believe a lot of the CPI is one-time tariff related and once those tariffs get baked in we should start to see it cool off next year. Most of the board believes a neutral rate target is somewhere around 3%.

The Fed already indicated if they don't see a cool off in inflation this quarter they may not cut rates again until next year.

There's a split amongst the members. One dissent in either direction at the last meeting which is pretty rare.

Trump will get his fed board appointed next year and will push a bunch of people who will cut rates to near zero again. People will celebrate it because it's Donald Trump and people don't really analyze anything he does based on a lens of pragmatics but rather whether you like him as a politician or not. Trump doesn't give two craps about inflation. He wants the cheap money to flow.

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What does "cheap money to flow" mean for the average, non-401k upper middle class folks?

Well it help bring down prices of groceries or housing, perhaps? Or will it likely be another round of checks mailed to everyone with his signature on them?

It will it do nothing for them?

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Does it lower credit card APRs and interest charged? If so, that does make a helpful difference.

Lower the rates and houses that aren't moving because of high rates start to move.

As millions leave the country, pressure from the bottom is eased which should give young families more options. Give young families homes and they don't feel abandoned.

If 2 mil have left the country and the influx has stopped, then that frees up about 500k units. Only 1.6mil new units were added in 2024.

Expect, rents to stabilize and housing values to stagnate.

But I'm no expert, so what do I know.

No Spin Ag said:

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average, non-401k upper middle class folks?

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An upper middle class person without a 401k is an idiot.
If you are saying that's the "average", then God help us.

Stressboy said:

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Lower the rates and houses that aren't moving because of high rates start to move.

As millions leave the country, pressure from the bottom is eased which should give young families more options. Give young families homes and they don't feel abandoned.

If 2 mil have left the country and the influx has stopped, then that frees up about 500k units. Only 1.6mil new units were added in 2024.

Expect, rents to stabilize and housing values to stagnate.

But I'm no expert, so what do I know.

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You are on target. Two years ago, I thought I might sell our place for thousands more than I paid for it. Now, not so sure. Ive lived through several of these downturns and upturns. difference now, is internet whining.

Stressboy said:

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Lower the rates and houses that aren't moving because of high rates start to move.

As millions leave the country, pressure from the bottom is eased which should give young families more options. Give young families homes and they don't feel abandoned.

If 2 mil have left the country and the influx has stopped, then that frees up about 500k units. Only 1.6mil new units were added in 2024.

Expect, rents to stabilize and housing values to stagnate.

But I'm no expert, so what do I know.

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Stopping illegal immigration will have a profound effect on rent prices.

The Fed lowering short term rates doesn't necessarily equate to mortgage rates falling (usually tied to the 10 year treasury)



10 year rate has actually been climbing as fed funds rates have come down this year.

Look if I was advising Republicans on housing I'd say you need 4 things:

• Lower rates to refi or move from existing homes
• PE reform to limit the purchase of single family proprieties, no dividing single family into multi family (by PE) and divest timeline for PE on existing inventory
• Lower taxes and limit regulation/efficiency codes on houses ~5-6x of federal poverty level for family of 4.
• Link receiving HUD money to deregulation of starter homes.

Annual median income in 2 wage household is roughly $80k. Not sure how, but it apparently is. Assuming two modest car payments and minimal debt that level to purchase and afford a home is roughly $150-180k. Most starter homes are currently in the $260k range.

Stop PE propping up or inflating values, lower rates to encourage movement and try and stimulate supply without giving money away. Might even offer some tax incentives to builders who hit certain targets for this. Yeah it's not particularly fair to small builders but if you need to juice supply small builders aren't going to do it like Lennar, DR Horton, etc.

On one level that sounds good.

On the other hand, that's just more government intruding into free enterprise... which just screws it up and brings unintended consequences.

We need less government, not more.

Incorrect. Maybe it's correct if you extend your statement to include IRA's in addition to 401k's.

javajaws said:

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Put me in the camp that thinks rates need to be lowered and that the last few months' increases in CPI are due to tariffs (a mostly 1-off event) and not due to overheating of the economy (too much demand). Just look at the job market. Does that look like an economy that is running too hot? Yeah, I didn't think so.

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It's not really a 1-off event when there are different effective dates for the tariffs - it becomes more of a trend,

javajaws said:

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+1 to what Sims said.

I actually think there is another effect as well: consumer sentiment. Just lowering rates tends to help with sentiment about the economy in general - to the point it becomes somewhat of a self-fulfilling prophecy.

Raise rates and you can bet its gonna get rocky, regardless of the fundamentals or actual direct effect. The reverse is true as well - lower rates and watch people get hopeful and increase job openings, spending, etc.

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How did lowering rates in 2008 lead to better sentiment?

Logos Stick said:

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javajaws said:

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Put me in the camp that thinks rates need to be lowered and that the last few months' increases in CPI are due to tariffs (a mostly 1-off event) and not due to overheating of the economy (too much demand). Just look at the job market. Does that look like an economy that is running too hot? Yeah, I didn't think so.

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You can have both high inflation and high UE: stagflation. I'm not saying that is happening, but it can and does occur.

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If we were using Carter era metrics, I think that's where we're at.

Logos Stick said:

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I guess 3% is the new 2%.

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How do you fix this?