Fed Chairman Concedes Border Crisis Is Boosting Unemployment
‘We understand there's been quite an influx’
By Andrew R. Arthur on September 23, 2024
In explaining its reasons for cutting its benchmark interest rate by 0.5 percent on Wednesday, Fed Chairman Jerome Powell made a startling admission: The economy has cooled as unemployment has risen, and “one of the things that's allowed the unemployment rate to rise” has been “quite an influx across the borders” — confirming what the Center has been saying for quite a while as the border crisis has been raging.
The Interest Rate Cut. As a theoretical matter, the benchmark is the minimum percentage interest rate investors require when investing in a non-Treasury security. As a practical matter, it affects the amount consumers pay in interest when buying houses, cars, and appliances, and when paying back credit cards.
Prior to the September 18 cut, that rate was running around 5.3 percent, its highest level in 23 years, after rising 12 times since March 2022.
September 18 Press Conference. While a rate-cut was anticipated (the only real question was whether it would be 25 “basis points” or 50), the chairman’s statements about the cuts were the important part for investors and the stock market generally, because he can swing markets with his words — by suggesting, for example, a cut was necessary because a recession was in the offing.
https://cis.org/Arthur/Fed-Chairman-Concedes-Border-Crisis-Boosting-Unemployment
