Groundwork’s Dr. Rakeen Mabud on FOMC Rate Decision: “The Fed must continue to cut rates aggressively in the coming months”

September 18, 2024

Groundwork’s Dr. Rakeen Mabud on FOMC Rate Decision: “The Fed must continue to cut rates aggressively in the coming months”

Today, the Federal Reserve cut interest rates by 50 basis points. Groundwork Collaborative’s Chief Economist Dr. Rakeen Mabud reacted with the following statement:

“Today’s rate cut is a step in the right direction, but only a first step. The Fed must continue to cut rates aggressively in the coming months to prevent a slowing labor market and provide much-needed relief to people who are bearing the brunt of high interest rates.”

Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about the FOMC meeting.

BACKGROUND

High interest rates are driving up costs for families, stifling investment and putting that strong labor market at unnecessary risk. Inflation is under control but long and variable lags in monetary policy put our economy under threat, as Chair Powell has warned. Rates need to be normalized swiftly.
In its aggressive rate hiking campaign, the Fed pursued four consecutive 75 basis point rate hikes. They should be as aggressive in lowering and normalizing rates as they were in hiking them.
In August, CPI dropped to 2.5% year-over-year, with housing contributing the most to rising prices. But outside of housing, inflation has been near the Fed’s arbitrary 2% target for more than a year. High interest rates make housing inflation worse.