The Federal Reserve pushed interest rates above 5% a year ago, determined to achieve two things: much lower inflation and a cooler labor market.
It has succeeded. Inflation, by its preferred gauge, has fallen from 4.3% then to an estimated 2.6% now, the steepest decline since 1984, and within shouting distance of the Fedβs 2% target. Meanwhile, the unemployment rate has risen to 4.1% from 3.6%, an increase seldom seen outside recessions.
The Fed seems reluctant to take the win. This week Fed Chair Jerome Powell refused to say when, or if, the Fed would cut interest rates, New York Fed President John Williams said he needed more data, and Fed governor Chris Waller merely acknowledged a cut was βgetting closer.β Markets expect a cut in September.
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