Why an emergency rate cut is bad
The market has been desperately waiting for a FED rate cut for nearly a year now. We have not received one yet even with the recent flash crash in the market.
Despite calls for an emergency rate cut after the crash we didn't get one. Why not? Why is that a good thing?
When the rate cut does come which is expected still in September, we should hope for 25bps rate cut, nothing more. Small rate cuts a bullish sign that we are still doing ok. Large rate cuts is the equivalent to oxygen masks falling from ceiling, brace for rough landing.
Despite calls for an emergency rate cut after the crash we didn't get one. Why not? Why is that a good thing?
- The Fed does not cut rates out of the kindness of their hearts
- They cut rates only they broke something and they are trying to fix it
- The lack of emergency rate cut means the recent flash crash was more irrational panic, less based on actual facts
- The economic data while concerning in areas still is nothing alarming to the point for the Fed to "break glass in case of emergency" rate cut button over
When the rate cut does come which is expected still in September, we should hope for 25bps rate cut, nothing more. Small rate cuts a bullish sign that we are still doing ok. Large rate cuts is the equivalent to oxygen masks falling from ceiling, brace for rough landing.
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