50 Basis Points Rate Cut
We're so back!
Talking product sense with Ridhi
9 min AI interview5 questions
Historically, markets have encountered trouble whenever rate cuts occurred. The period from 2015 to 2019 was the only instance in the last 30 years when markets rose during rate cuts. It may not happen immediately but we might see the effects 3-4 months down the line possibly after the U.S. elections. We are likely to experience either a price or time correction, which is due anyway.
As a layman, what does it actually mean? Is it a good sign for the economy? Or bad?
Technically, it should be a good sign because more money could be poured into the economy. However it is usually more nuanced than this and the right pace for rate cuts is also needed among other factors for the economy to flourish. This is a huge topic and I'm no economist so I wouldn't want to guarantee anything. I'm glad they're finally addressing the awful job market and hurting economy.
Understood. Thanks
Recession is closeby
What makes you say that? We technically might get a recession but that will just be because of lagging data. Economic conditions are just going to improve, especially the shitty job market.
The fed cut a similar amount to respond to the housing crisis back in 2007. They are just doing things which they can foresee.
https://share.gvine.app/7Rrcx17kUddJ3ZAg6
We made a post about this, for anybody who wants more context :)
Good post!
Even grapevine doesn't pay to interns. Grapevine has a lot of posts about unpaid interns
Lmao when they cut rates by a larger amount, this means there’s more incentive for companies to take out loans. As in, loans are less expensive, less interest to pay back, so more money overall flowing for projects to invest in, ie the job market improves.
The entire reason fed rates were high to begin with was because the job market was too strong, leading to inflation because the demand for work was so high that employees could negotiate for higher salaries thus causing price and spending competition on goods where the prices kept climbing higher and higher since everyone who was in a certain wealth group could afford to pay more.
The funding within my own org was already fucked by the time this happens, hence why there were no spots for me.
As such, now that the fed’s reducing rates by a larger amount, the job market is going to turn back on, meaning it will become easier for me to get hired again.
Not really. Fed rates went high because inflation went high due to over supply of money in the market. Fed printed a LOT of money in the pandemic and that money being circulated in the market increased prices, a byproduct of which was more money being invested into businesses, more jobs and higher wages BUT that money also disproportionately went MORE to the top 1% and the wealth gap increased further. For example the wealth of Bezos rose by a much higher % than an average amazon employee.
Why do you think the stock market didn't tank when we kept having repeated layoffs and salary slumps? Because most money in stock market is of the top 1%, they downsized on the workforce to maintain profits and weren't affected negatively at all. It's just the working class that paid the price for something they had no fault in.
Well the US economy is growing with 2 percent in GDP numbers and is expected to grow for the next 2 years as per the Fed chief. This is considered healthy growth. The correction in the market will probably be due to tightening of interest rates by the bank of Japan which is scheduled this week.
Lesss goooo