Home|About Us|Our Services|News|Resources|Disclosures|Client Login|Contact Us

The Fed Just Cut Rates Again; What's It Mean To You?

The Fed cut rates again on October 30th, for the third time in 2019. What's it mean to your long-term financial plan?

The rate cut is a reversal in policy and not what the Fed had expected to do, which is worrisome because the Fed has caused every recession in modern U.S. history by making a policy mistake. However, admitting its previous financial plan had been wrong, the Fed's abandonment of its earlier forecast, that inflation was a danger, is encouraging.

Federal Reserve policy has grown far more responsive to economic fundamentals and market sentiment. Former Fed Chair Ben Bernanke, who had studied financial crises for decades before becoming the nation's top central banker, was the right person to guide the economy when the global financial crisis occurred in 2008. He implemented policies never-before tried in a major world economy. His successor, Janet Yellen, a labor economist, who fatefully had spent her professional life studying how to increase employment, continued Mr. Bernanke's quantitative easing plan and deftly extended the expansion.

Although opinions about the direction of interest rates or stock prices in the next year or two will always vary, it is clear that the Federal Reserve has made progress in achieving its dual mandate to promote employment and control inflation. The Fed — led by Jerome Powell and backed by a deep team of the world's best minds — has abandoned its long-held forecast for a 2% inflation rate — and in admitting its mistake to raise rates on December 14th, 2018, its change of policy should be viewed in the context the Fed's progress. The third interest-rate cut of 2019 signaled that the Fed is no longer worried about inflation and determined to defend the 10½-year long expansion in 2020 and beyond, even if it means admitting it made a mistake and is changing course.

Amid the cacophony of modern-day living, don't lose sight of the unceasing progress in the world, and always try to frame your long-term investment perspective from this easily overlooked trend of civilization.


This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.


Email this article to a friend


This article was written by a professional financial journalist for Neiman & Associates Financial Services, LLC and is not intended as legal or investment advice.

©2020 Advisor Products Inc. All Rights Reserved.
 
Printer Friendly Version
Index
Don't Be Deceived By New Tax Law's Name
China Poses A Hidden Risk For Many 401(k)s
Growth Of The Consumer Class And The Investment Outlook
Exceptions To The New Rule On Inherited IRAs
Repeated Tax Reforms Raise The Risk Of Doing Nothing
Boomers Working Past Age 65 Are A Surprise Boost
Study: Wall Street's Tactical Methodology Isn't Working
Three Major Investing & Tax Planning Trends For 2020
SECURE Act Is Law: Last Call For 2019 Tax Savings
Performance Anxiety: A Leading Cause Of Investor Dysfunction After Age 55
How Worldwide Demographics Affect Your Portfolio
Financial Lifeboat Drill For Mustering In Emergencies
Hiddenomics™ Challenge: Find The Leading Economic Indicators
20-Second Year-End Tax Planning Quiz For Pre-Retirees
Last Chance In 2019 For Pre-Retired Professionals & Biz Owners
© 2020 Neiman & Associates Financial Services, LLC | 22 Mill Street, Suite 303, Arlington, MA 02476 | All rights reserved
P: 781-641-5700 | F: 617-812-2594 info@neimanonline.com |
Disclosure | Contact Us