"In his press conference following the Fed's decision to begin its rate cutting cycle with an unusually large 50 basis point cut, unprompted, Federal Reserve Chairman Jerome Powell insisted that the action was not a 'mission accomplished' moment. Yet his awareness of that potential criticism belies the reality that today's move is a risky one for the Federal Reserve. While the labor market has shown some marginal signs of softening in recent months, real economic output continues to grow at a healthy pace and inflation appears to be settling above the Fed's stated target across a range of measures. Presumably concern about the credibility of the Fed's commitment to its inflation mandate is what prompted Fed Governor Michelle Bowman to dissent from today's decision — the first dissent by a member of the Board of Governors since 2005. When President Bush landed on the USS Abraham Lincoln in May 2003, it was far from clear that the coming years would see a deterioration of the security situation in Iraq that would render 'mission accomplished' an infamous term in American governance. Only time will tell us whether the Fed's move today will gain similar notoriety, but that risk is certainly present.”
- Dan Katz, Manhattan Institute Fellow
Katz previously served as a senior advisor at the United States Department of the Treasury. He has published widely on economic policy, international affairs, and financial markets in City Journal, The Wall Street Journal, Bloomberg, the Financial Times, Barron’s, National Review, The Hill, and the Center for Strategic and International Studies. For a list of his previous writing at the Manhattan Institute, click here.
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