Fed's 'Hawkish' Rate Cut Raises New Questions For Policy Outlook

James Picerno6.86K FollowersFollow5ShareSavePlay(5min)CommentsSummaryThe Federal Reserve cut interest rates by a ¼-point yesterday, as expected. The stock market rallied and Treasury yields fell.Fed Chair Jerome Powell suggested the central bank would stay cautious on whether to cut further.The labor market, however, is motivating concerns that the economy will continue to weaken, which implies more rate cuts are reasonable. Kenishirotie/iStock via Getty Images The Federal Reserve cut interest rates by a ¼-point yesterday, as expected. The stock market rallied and Treasury yields fell. But the cut is considered “hawkish” because the central bank remained vague about the prospects for more policy easing inThis article was written byJames Picerno6.86K FollowersFollowJames Picerno is the director of analytics at The Milwaukee Co., a wealth manager that is the adviser to The Brinsmere Funds, a pair of global asset allocation ETFs. He also edits CapitalSpectator.com and The US Business Cycle Research Report (CapitalSpectator.com/premium-research). He is the author of three books, including "Quantitative Investment Portfolio Analytics In R: An Introduction To R For Modeling Portfolio Risk and Return." Previously he was a financial journalist at Bloomberg and before that at Dow Jones.Quick InsightsHow does the Fed's updated outlook affect expectations for further rate cuts?The Fed's projections for higher GDP growth and lower inflation support a pause in additional rate cuts, with only one cut expected in 2026.What labor market signals could influence the Fed's future policy decisions?Recent data may overstate job creation by up to 60,000 jobs monthly, implying actual job losses and potentially justifying more rate cuts if weakness persists.Why are long-term Treasury yields rising despite the Fed's rate cut?Rising long-term yields reflect concerns about unsustainable federal debt and a steepening yield curve, suggesting structural rather than purely cyclical drivers.Recommended For You