The FED that Stole Christmas

In what could be described as a Grinch-like move, the Federal Reserve's latest meeting has left many wondering if the holiday cheer will be dampened by economic realities. Today, the Federal Open Market Committee (FOMC) announced a 25 basis points (bps) interest rate cut. This latest cut brings the total for 2024 to 100 bps, a significant easing of monetary policy. However, this decision has sparked a flurry of debates on its implications for holiday spending and beyond.

The Rate Cut

This cut was expected to provide some relief to borrowers, potentially boosting consumer spending during the festive season. However, the market's reaction has been anything but merry. The S&P 500 falls sharply after the Fed cuts rates by 25 basis points, but raises inflation forecast. Notably, Cleveland Fed President Beth Hammack dissented from this decision, indicating a split in views within the Fed about the path forward.

Fed's Projections for 2025