Liz Wolfe:

“We’re taking advantage of the fact that we have moved quickly to move a little more carefully now,” Federal Reserve Chair Jerome Powell told a gaggle of reporters yesterday in reference to the Fed’s decision not to hike interest rates further. Rates are currently hovering at 5.25–5.5 percent, and the Federal Reserve has, for the past 18 months, been aggressive with raising them in an attempt to cool runaway inflation.

But yesterday, the Associated Press reported that “the 19 members of the Fed’s rate-setting committee conveyed growing optimism that they will manage to slow inflation to their 2% target without causing the deep recession that many economists had feared” (also called a “soft landing”). Powell and the rest of the rate-setting committee did note that rate hikes are still absolutely possible as the year progresses, but that the current state of inflation coupled with low unemployment and strong economic growth means there’s reason for optimism that inflation will cool back down to their target by 2026. “Fed officials now expect their benchmark rate to be at 5.1% by the end of next year, according to their median estimate, up from 4.6% in the last projection round in June,” according to Bloomberg. Basically, it’s shaping up to look like interest rates won’t be hiked higher, but that inflation will likely be around longer than many had previously predicted.

Though this is decent news, remember that President Joe Biden spent much of July trying to convince American voters that he was God’s gift to (working) man via his “Bidenomics” speeches, in which he touted his role in raising pay for low-wage workers while decrying trickle-down economics and taking responsibility for having personally restored the “American dream.” Pretty rich given that my grocery store now charges $8 for a gallon of milk (New York City, baby), that the prices of eggs and meat have gone sky-high, and that plenty of people have deferred home-buying decisions, unable to hack it given the high mortgage rates and large monthly payments that result. If I were him, I would simply not try to act like the economy has flourished under my watch, and demonstrate a bit more humility with regard to how multiple years of high inflation harms both Americans’ budgets and long-term plans and is connected to reckless government spending.