Tag Archives: interest rates

The Latest News On Inflation

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On August 12, Breitbart posted an article about the current inflation rate.

The article reports:

Consumer prices inched up in July after declining sharply in June.

The consumer price index rose 0.1 percent compared with June, the Department of Labor said Wednesday. Compared with a year ago, the consumer price index is up 3.4 percent.

That matched the consensus forecast. In June, prices fell 0.4 percent while the consumer price index was up 3.5 percent from a year ago.

Core prices, a measure that excludes volatile food and energy prices, rose 0.2 percent compared with the previous month. For the year, core prices are up 2.5 percent, a decline in year-over-year inflation from the previous month’s 2.6 percent.

The moderate monthly readings across all times and core inflation, along with the decline in the year-over-year inflation rate, will likely ease concerns among Fed officials. Prices of fed funds futures implied the odds of a rate hike at the Fed’s next meeting in September fell from nearly 50 percent to around 40 percent.

Goods prices fell 0.2 percent, the second consecutive monthly decline. Excluding food and beverages, goods prices dropped 0.4 percent. Durable goods prices rose 0.3 percent after declining in May and remaining flat in June.

The goal of the Federal Reserve is to keep inflation at 2 percent; however, their policies seem to reflect politics more than inflation strategy.

Artificial Intelligence (AI) notes:

The last time the United States experienced an average inflation rate of around 2% was in 2021, when the annual inflation rate was approximately 4.7%, but it had been lower in previous years, specifically around 2.1% in 2018. The Federal Reserve typically aims for a long-term inflation target of 2%.

AI notes:

Overview of Federal Reserve Interest Rates (2016-2024)

The following points summarize key trends and changes in interest rates during this period.

  • Initial Rate (2016) — The federal funds rate was set at 0.25% in December 2015 and remained unchanged until December 2016.
  • Gradual Increases (2017-2018) — The Fed raised rates several times, reaching 2.50% by December 2018.
  • COVID-19 Response (2020) — In March 2020, rates were cut to near zero (0-0.25%) to support the economy during the pandemic.
  • Inflationary Pressures (2021-2022) — Rates remained low until inflation concerns prompted increases starting in March 2022.
  • Current Rate (2024) — As of 2024, the federal funds rate is approximately 5.25%, reflecting ongoing efforts to manage inflation.

During the first two years of the first Trump administration, interest rates were raised. In 2020, rates were lowered and remained low halfway through the Biden administration.

Draw your own conclusions.

A Good Temporary Move

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On June 17th, The Gateway Pundit posted an article about the results of the first Federal Reserve Board meeting since Kevin Warsh became Chairman.

The article reports:

The Federal Reserve on Wednesday held rates steady in Kevin Warsh’s first meeting as Fed Chairman.

The Federal Open Market Committee (FOMC) voted unanimously to keep rates unchanged.

The benchmark rate is currently 3.5% to 3.75%.

Late last year the Federal Reserve lowered interest rates by 75 basis points – or 0.75%.

I believe that at least temporarily this is a good move. Right now we are experiencing some degree of inflation because of the impact of the war in Iran. If the peace treaty holds, that inflation will subside, and rates can be lowered in the future. I have read that despite the treaty about to go into effect, drones are being fired at ships in the Strait of Hormuz. If that firing continues, I am not sure the treaty will hold. The fighting in Lebanon also may have so impact on the success of the treaty.

The article quotes CNBC:

Kevin Warsh’s first meeting as Federal Reserve chairman concluded Wednesday with no change in interest rates, the removal of key language indicating a bias toward future cuts, and a dramatically shorter policy statement.

The Federal Open Market Committee voted unanimously to keep its benchmark overnight borrowing rate anchored in a range of 3.5%-3.75%. The federal funds rate has held there since the central bank lowered rates by three-quarters of a percentage point in the latter part of 2025.

With a bevy of intrigue over Warsh taking the central bank helm, the meeting followed the same pattern as the others this year regarding rates but differved otherwise.

Wall Street did not like this decision. I think that all things considered, it was the right decision. The decision also affirms the independence of the Federal Reserve from the wishes of the President. I wish we could get rid of the Federal Reserve, but as long as we have it, I don’t want it controlled by the White House, regardless of who is President. If you have never read THE CREATURE FROM JEKYLL ISLAND by G. Edward Griffin, this would be a really good time to read it.

Watching The Economic Numbers

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On Sunday, The Center Square posted an article about consumer spending.

The article reports:

This week, the focus shifts to the consumer, with March retail sales and the National Association of Realtors’ pending home sales report.

Both reports are likely to point to a modest pickup from February. For retail sales, part of the gain may reflect firmer prices and support from tax refunds. But the bigger question is whether real, inflation-adjusted spending is holding up. The consumer still looks resilient, though more selective and cautious than a year ago.

On housing, there is less need to wait for the NAR report because Zillow already provides a timelier read on contract activity. Zillow’s March market report showed 281,546 newly pending listings, the second-highest monthly total since August 2022. Newly pending sales were up 4.6% from a year earlier and nearly 30% from February, the strongest March showing since 2021. Zillow attributes that strength to pent-up demand after three years of weak sales, weather-related disruption that softened activity in January and February, and a somewhat improved affordability picture from a year ago. 

That suggests the home shopping season is still underway and that households had not fully pulled back as of March. Even so, the boost may prove temporary if energy prices stay elevated, mortgage rates remain high, or the labor market softens further. Zillow has already marked down its 2026 existing-home-sales outlook because higher-than-previously-expected mortgage rates could weigh on demand.

The April backdrop has improved somewhat, but not enough to declare the all-clear. Freddie Mac’s 30-year mortgage rate eased to 6.30% in the week ending April 16, down from 6.37% a week earlier. Initial jobless claims fell to 207,000 in the week ending April 11. The four-week average remains low at 209,750, while the four-week average of insured unemployment has edged down. 

I believe that the Federal Reserve needs to lower interest rates in order to recover the economy from the damage done during the four years of President Biden. I also believe that the Federal Reserve needs to be dismantled, but that is another story.

The article concludes:

The message for now: March likely captures a consumer that was still hanging in. April looks a little better at the margin, but the durability of that improvement will depend on whether energy prices continue to move lower, mortgage rates ease further, and the labor market regains firmer footing.

Hopefully, energy prices will decrease in the near future.

Goods News For The America Economy

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On Thursday, The Epoch Times posted an article about the unemployment numbers released for last week. Some of the economic statistics for October and November have not been released because of the government shutdown. I am not sure if they are going to be released.

The article reports:

The number of Americans filing for first-time unemployment benefits declined to the lowest level in more than three years, new Department of Labor data released on Dec. 4 show.

For the week ending Nov. 29, initial jobless claims fell by 27,000 to 191,000, marking the fourth consecutive weekly drop.

Economists had penciled in a reading of 220,000.

Notice how the economists’ estimates are always more negative than the actual figures when a Republican is in office.

The article notes:

But while slowing layoffs and declining jobless claims have been positive signs, the futures market overwhelmingly expects the Federal Reserve to lower interest rates when monetary policymakers convene their two-day policy meeting next week.

Minutes from the October Federal Open Market Committee meeting reveal a divergence in views of where monetary policy is headed. Commentary from central bank officials also suggests different assessments of the U.S. economy.

“From late spring through June, the soft data, including anecdotes from business contacts, suggested the labor market was in a ‘no hire, no fire’ equilibrium,” Fed Gov. Christopher Waller said in a speech last month. “Firms repeatedly said they were holding off on hiring for a variety of reasons.”

Waller, considered a top contender to replace Fed Chair Jerome Powell next year, supports a quarter-point rate cut to the benchmark federal funds rate.

Cleveland Fed President Beth Hammack has expressed skepticism over further rate cuts, warning of high inflation.

“I remain concerned about high inflation and believe policy should be leaning against it,” Hammack said at a Nov. 6 Economic Club of New York event.

The headline annual inflation rate presently sits at 3 percent. The Fed’s preferred inflation measure—the personal consumption expenditure price index—is at 2.7 percent.

Somehow inflation was not a worry when the rates were cut during the Biden administration. Considering how much the rate of inflation has dropped, I think it is time to cut the rates and let the housing market loose.

What History Says vs. What The Media Says

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On Friday, Breitbart posted an article about what the historical data says about the impact of tariffs.

The article reports:

A sweeping new analysis of tariff policy spanning 150 years suggests that the economic establishment may have fundamentally misunderstood how tariffs affect prices and employment, a finding with profound implications for understanding President Donald Trump’s trade policy and the proper response by the Federal Reserve.

Researchers at the Federal Reserve Bank of San Francisco examined major tariff changes from 1870 through 2020 across the United States, the United Kingdom, and France. Their conclusion challenges the conventional wisdom that dominated economic policy debates in recent years: when countries raise tariffs, prices actually fall, not rise.

The article concludes:

More importantly, the study removes the most potent intellectual weapon from the free-trade arsenal: the claim that tariffs inevitably raise consumer prices. For generations, this assertion ended policy debates before they could begin. Policymakers considering tariffs faced the accusation that they were imposing a regressive tax on consumers. Kamala Harris, in her failed bid for the presidency last year, repeatedly described Trump’s tariff proposals as a national sales tax that would increase consumer prices. Now that idea lies in tatters.

With the consumer price argument dismantled, the debate over tariffs can proceed on grounds better rooted in economic history and national purpose. Policymakers can weigh the benefits of protecting domestic industries, rebalancing trade relationships, and rebuilding manufacturing capacity against the effects on economic activity and employment. They can consider whether tariffs might encourage productive investment and industrial development, questions that have been largely off-limits in mainstream economic discourse.

The paper’s findings also call into question the Fed’s response to tariffs. If the main effects are lower inflation and higher lower employment, monetary theory would suggest that the Fed should cut interest rates when tariffs are imposed. Instead, the Fed this year took the opposite course, holding interest rates steady and only cutting hesitantly—moves that now look like a major policy mistake.

Unfortunately, in recent years, cutting interest rates has more to do with politics than economic data. When someone the fed likes is President, interest rates move lower quickly and stay low if at all possible (however, if inflation becomes too high and too obvious, they will raise them). When someone the deep state dislikes is President, interest rates tend to be lowered very slowly if at all.

This Could Be The Start Of Something Big!

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On Friday, CNBC reported the following:

  • With government red ink swelling throughout the year, June saw a surplus of just over $27 billion, following a $316 billion deficit in May.
  • Customs duties totaled about $27 billion for the month, up from $23 billion in May and a 301% gain from June 2024.

CNBC notes:

That brought the fiscal year-to-date deficit to $1.34 trillion, up 5% from a year ago. However, with calendar adjustment, the deficit actually edged lower by 1%. There are three months left in the current fiscal year, which ends Sept. 30.

A 13% increase in receipts from the same month a year ago helped bridge the gap, with outlays down 7%. For the year, receipts are up 7% while spending has risen 6%.

The government last posted a June surplus in 2017, during President Donald Trump’s first term.

Increasing tariff collections are helping shore up the government finances.

Customs duties totaled about $27 billion for the month, up from $23 billion in May and 301% higher than June 2024. On an annual basis, tariff collections have totaled $113 billion, or 86% more than a year ago.

The article notes that the interest on the debt is a major budget item:

Net interest on the $36 trillion national debt totaled $84 billion in June, down slightly from May but still higher than any other category with the exception of Social Security. For the year, net interest — what Treasury pays on the debt it issues minus what it earns on investments — is at $749 billion. Total interest payments are projected at $1.2 trillion for the full fiscal year.

Lowering interest rates would bring down that cost.

Admitting The Obvious

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I have stated my views of the Federal Reserve numerous times. It needs to go. For an explanation of why I believe this, please watch this video. It is long, but worth the watch.

If I had any doubts about the politicization of the Federal Reserve, those doubts were confirmed by an article posted at Breitbart on Tuesday.

The article reports:

The Fed chair (Federal Reserve Chair Jerome Powell) once warned against using speculative forecasts to drive policy. Now he’s doing exactly that.

Federal Reserve Chair Jerome Powell made a quiet but extraordinary admission on Tuesday: if the Fed were following the actual data, it would be cutting interest rates. But it isn’t—because the Fed expects President Trump’s tariffs to raise inflation, and it’s choosing to act on that forecast instead.

“If you just look at the basic data and don’t look at the forecast, you would say that we would’ve continued cutting,” Powell told lawmakers. “The difference, of course, is at this time all forecasters are expecting pretty soon that some significant inflation will show up from tariffs. And we can’t just ignore that.”

That’s a remarkable departure from the Fed’s longstanding mantra of data-dependence. It also reveals the extent to which the central bank is allowing anti-tariff bias—and speculative inflation models—to override clear economic signals pointing toward looser policy.

The data are, in Powell’s own words, favorable to a resumption of rate cuts. Inflation has come down meaningfully. We don’t yet have the personal consumption expenditure index reading for May, but Harvard economist Jason Furman’s calculation based on CPI is that the three-month annualized rate is around 0.6 percent for headline inflation and 1.4 percent for annualized inflation. The year-over-year figure is two percent for headline, exactly at the Fed’s target, and 2.5 percent for core inflation.

The article reminds us of some of Powell’s recent mistakes:

In some ways, Powell’s decision to ignore current data in favor of tariff-driven inflation forecasts echoes a costly Fed error from the recent past. In 2021, the Fed insisted that inflation was “transitory,” even as prices surged month after month. Officials were guided not by what the data showed, but by what their models predicted—that supply chain pressures would ease and inflation would naturally subside. It didn’t. And the Fed was forced to scramble, hiking rates aggressively in 2022 and 2023 to restore credibility.

Reducing interest rates at this point would help significantly in the recovery of America’s economy. After four years of inflation, lower wages, and slow employment growth, Americans are ready for the Federal Reserve to be a help rather than a hindrance.