Fed Meeting Rate Cut📈Jerome Powell LIVE🔴

The Federal Open Market Committee (FOMC) approved a 25-basis point rate cut, making it the second cut of the year, and announced the end of quantitative tightening (QT) effective December 1st, signaling a shift towards a more neutral monetary policy amid concerns about a softening labor market and elevated inflation.

• The Fed enacted a 25-basis point rate cut and ended quantitative tightening effective December 1st.

• Major job losses across large companies and persistent inflation above target underscore a 'K-shaped' economy.

• The future of rate adjustments is uncertain due to internal Fed divisions and a lack of comprehensive economic data.

The FOMC, led by Chair Powell, voted to reduce the federal funds rate by a quarter percentage point and cease balance sheet runoff by December 1st, moving towards easing monetary policy. This decision comes amidst a challenging economic landscape characterized by significant job losses across major companies, persistent inflation above the 2% target, and a growing divergence in economic performance between asset owners and the working class, dubbed a 'K-shaped economy'. The Fed faces a difficult balancing act between supporting employment and maintaining price stability, with the path for future rate adjustments remaining uncertain.

Fed Rate Cut & QT End

• 00:01:22 The Federal Open Market Committee (FOMC) implemented a 25-basis point rate cut, marking the second such reduction this year, and announced the conclusion of quantitative tightening (QT) effective December 1st. This shift aims to inject more liquidity into the markets, a move anticipated to be bullish for assets like Bitcoin and Ethereum, despite ongoing concerns about inflation and the job market.

Concerning Job Market Trends

• 00:02:05 Massive job cuts by major companies like Nestle (16,000), Amazon (15% of roles), Google, Accenture, Salesforce, and Microsoft highlight a significant weakening in the labor market. This trend is a major concern for the Fed, which operates under a dual mandate to control inflation and maintain a positive job narrative, as a combination of rising inflation and job losses could lead to stagflation.

Inflation & Economy Outlook

• 00:04:41 Inflation has decreased from its mid-2022 highs but remains above the Fed's 2% long-term target, with core PCE prices rising 2.8%. There is a growing concern that the Fed might reposition its inflation 'neutral' target closer to 3%, which would be detrimental to the American economy by broadly raising prices. The economic activity expands at a moderate pace (GDP up 1.6%), yet risks to employment are tilted to the downside, creating a challenging policy environment.

The 'K-Shaped' Economy

• 00:13:33 The economy is characterized as 'K-shaped,' signifying a widening divide where investors and asset owners are experiencing all-time highs in gold, stocks, and cryptocurrencies, while a substantial portion of the population faces job losses and financial hardship. This dichotomy is evident in corporate earnings, which are strong due to cost-cutting through layoffs, further exacerbating the gap between the affluent and those struggling.

Impact of AI on Jobs & Investment

• 00:23:08 The rapid acceleration of AI is expected to dramatically cannibalize the gig economy and lead to more job losses in 2026, putting pressure on earnings for many companies. Bill Gates emphasizes AI as the biggest technical revolution of his lifetime, attracting massive investments into chipmakers and data centers, yet its impact on interest-sensitive spending and market bubbles is not seen as significant by the Fed, which considers AI investments driven by long-term economic assessments rather than short-term rate fluctuations.

Monetary Policy Divergence & Future

• 00:34:51 The FOMC exhibits strongly differing views on future monetary policy, particularly regarding a potential rate reduction in December, which is not a 'foregone conclusion.' Committee members hold diverse forecasts and risk tolerances concerning inflation and employment, leading to internal divisions. Powell acknowledged that a continued government data blackout could necessitate a more cautious approach, likened to 'driving in the fog,' in future policy decisions.