Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some
continued education for some credentials I maintain and it occurred to me that
we all could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Should the Federal Reserve cut rates next month?
Fed Chair Jerome Powell
seems to have changed his mind on interest rates
By Phillip
Molnar | The San Diego Union-Tribune
UPDATED: August 29,
2025 at 11:26 AM PDT
Federal Reserve Chair Jerome Powell recently
opened the door for the central bank to cut rates next month.
Powell had previously cited risks of inflation from tariffs and a weakening
labor market as reasons for not lowering rates. “The balance of risks appears
to be shifting,” he said at a conference in Wyoming.
President Donald Trump has been calling for
interest rate cuts for most of his second term. Some experts, and other Federal Reserve officials, have cautioned against cutting rates because it could limit
the Fed’s tools if a major economic downturn happens.
Question: Should the Federal Reserve cut rates next month?
Economists
James Hamilton, UC San Diego
YES: The latest data show a significant
slowdown in new jobs, and high interest rates are weighing on real estate. Many
of us feared that tariffs would lead to much higher inflation. That hasn’t
happened yet, though it still could. Given the current balance of risks, I
would like to see the Fed lower its main interest rate by 0.25% at the next
meeting. I would wait for more data after that before deciding on the next
step.
Caroline Freund, UC San Diego
School of Global Policy and Strategy
YES: Provided there are no major surprises in
inflation and jobs data. The main rationale for waiting is potential price
effects from tariffs, but that concern is overstated. Imports account for
just 11% of U.S. GDP and if tariffs are passed through to prices, it is a
one-time effect. A 25-basis-point cut will have only a marginal effect on the
economy and keep the Fed from being behind the curve should current employment
and inflation trends continue.
Kelly Cunningham, San Diego
Institute for Economic Research
NO: Interest rates are simply the price of
borrowing money. Household and corporate debt remain at all-time highs.
Interest rates, price of credit and flow of capital should be controlled by
supply and demand, not centrally commanded by small committee of bankers and
economists or popularity seeking politicians. Effects of lower short-term
interest rates will require quantitative easing, inverting yield curve as
long-term rates fall, inflation spikes and U.S. dollar further plummets as
reserve currency.
Alan Gin, University of San
Diego
NO: While employment growth has slowed, it
is uncertain whether the slowdown will dampen the inflationary impacts of the
increased tariffs. The Yale Budget Lab estimates that the tariffs will add 1.8%
to inflation in the short run and 1.5% in the long run. That would put
inflation near or above 4%, which is double the Fed target. This factors in
lower GDP growth and higher unemployment. Lowering interest rates at the next
meeting could lead to an even higher spike in inflation.
David Ely, San Diego State
University
YES: The latest data released by the BLS indicates
that the U.S. labor market is weaker than thought. The July estimate and the
large downward revisions to the May and June numbers indicates employment is
growing at a sluggish rate. The Federal Reserve still needs to worry that
tariffs will push prices higher for consumers and businesses. But a weak labor
market poses a more significant risk to the economy at the moment.
Ray Major, economist
YES: In response to inflation hitting 7%, the Fed
raised rates to slow inflation. That job is done. With inflation now at 2.7%,
it is time to start giving the average American a break on their home
mortgages, car loans and credit cards. Lowering interest rates would also
stimulate economic growth, create more jobs and boost the economy. Right now,
the Fed is playing politics and it is hurting consumers and businesses.
Executives
Phil Blair, Manpower
NO: Not unless warranted by Jay Powell’s
standards, without administration pressure. We count on Mr. Powell to use his
good judgment, not to be pressured for the administration’s solely personal and
political advantage.
Gary London, London Moeder
Advisors
YES: But I am only answering yes because it
is high interest rates that contribute to a significant slowdown in home
trading. I sense that inflation is trending uncomfortably high, which will
likely be reflected in future reporting, while economic growth has slowed. All
mostly owed to tariffs and poor economic policy. I fear stagflation and expect
an independent Fed to make this interest cut a modest one, while halting
further reductions.
Bob Rauch, R.A. Rauch &
Associates
YES: July’s jobs report showed only 73,000
jobs were added, with downward revisions to prior months. Unemployment was up
to 4.2%, and job growth has averaged just 35,000/month over the past quarter.
July’s Consumer Price Index rose 2.7% year-over-year, close to the Fed’s 2% target.
Core inflation was 3.1%, slightly above target. Typically, inflation risk would
say “wait,” but employment risk and the likelihood that tariff risk will soon
come to an end say “yes!”
Chris Van Gorder, Scripps
Health
YES: The labor market appears to be slowing
now. Though other indicators might not be consistent with lowering the rate, it
is time to take our foot off the brake slightly by enacting a small rate
reduction. But if rates are lowered, I would hope it is because of economic
indicators and not political pressure. It is vital that Federal Reserve
decisions be objectively based. Our markets must have confidence in the
decisions.
Jamie Moraga, Franklin Revere
YES: A key issue is whether the Fed waited too
long. While many global counterparts have already eased, the U.S. has stayed in
“wait and see” mode. With ongoing inflation pressures and tariff uncertainties,
caution has dominated policy. But raising or cutting rates is always a
balancing act — and we now seem to be at a tipping point. A gradual cut could
help test the system’s resilience while supporting economic growth.
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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