Accounting
Fed cuts rates by half point in decisive bid to defend economy
The Federal Reserve lowered its benchmark interest rate by a half percentage point Wednesday, an aggressive start to a policy shift aimed at bolstering the U.S. labor market.
Projections released following their two-day meeting showed a narrow majority, 10 of 19 officials, favored lowering rates by at least an additional half-point over their two remaining 2024 meetings. Seven policymakers supported another quarter-point rate reduction this year, while two opposed any further moves.
The Federal Open Market Committee voted 11 to 1 to lower the federal funds rate to a range of 4.75% to 5%, after holding it for more than a year at its highest level in two decades. It was the Fed’s first rate cut in more than four years.
“This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%,” Fed Chair Jerome Powell said in a press conference following the announcement.
Al Drago/Bloomberg
Powell cautioned against assuming the half-point move sets a pace that policymakers would continue.
“I do not think that anyone should look at this and say, ‘Oh, this is the new pace,'” Powell said.
Until recently, officials put an emphasis on their quest to stifle inflation. In their statement Wednesday, policymakers indicated they now see the risks to employment and inflation as “roughly balanced.” The committee is “strongly committed to supporting maximum employment” in addition to bringing inflation back to its goal, officials said.
The S&P 500 index swung between gains and losses after hitting an all-time high in the immediate aftermath of the Fed decision. Treasury two-year yields remained slightly lower than before the announcement. Investors are betting on an additional 75 basis points of cuts by year end, according to futures.
Policymakers penciled in an additional percentage point of cuts in 2025, according to their median forecast.
Governor Michelle Bowman dissented in favor of a smaller, quarter-point cut — the first dissent by a governor since 2005 and the first dissent from any member of the FOMC since 2022.
In an interview with Bloomberg Television, KPMG Chief Economist Diane Swonk said Powell’s willingness to cut aggressively despite a governor’s dissent was a sign of “how much he wanted this half-percent rate cut.” And getting the rest of the committee to go along, she added, was a “huge victory.”
In their statement, policymakers said they will consider “additional adjustments” to rates based on “incoming data, the evolving outlook and the balance of risks.”
They also noted that inflation “remains somewhat elevated” and job gains have slowed.
Officials updated quarterly economic forecasts, raising their median projection for unemployment at the end of 2024 to 4.4% from 4% forecast in June. That would represent a small deterioration from the current level of 4.2%. Powell said last month that further cooling in the labor market would be “unwelcome.”
The median forecast for inflation at the end of 2024 declined to 2.3%, while the median projection for economic growth ticked down to 2%. Policymakers still don’t see inflation returning to their 2% target until 2026.
Officials again raised their projection for the long-run federal funds rate to 2.9% from 2.8%. Powell added that he believes interest rates are unlikely to return to the ultra-low levels seen for many years before the pandemic.
New chapter
Wednesday’s decision begins a new chapter for the Fed, which started lifting borrowing costs in early 2022 to curb a pandemic-driven surge in prices. Inflation, fanned by supply-chain disruptions and a wave of demand from locked-down consumers, ultimately climbed to its highest level since 1981.
The central bank raised rates 11 times, bringing its benchmark to a two-decade high in July 2023.
Since then, inflation has cooled considerably and — at 2.5% — is nearing the Fed’s 2% target. And while the labor market has weakened, there’s no clear indication the US economy is in recession or on the cusp of falling into one. Layoffs remain low, consumers are still spending and economic growth is strong.
“The updated dot plot suggests a gradual path of rate cuts going forward, suggesting the Fed sees the 50-basis-point move as a preemptive one that will be enough to stabilize the labor market. The median participant still sees real GDP growing at a solid pace of 2% this year,” said Anna Wong, Stuart Paul, Eliza Winger and Chris Collins, economists with Bloomberg Economics.
Still, there are growing signs of strain.
The muddied economic picture has increased uncertainty and spurred divisions among Fed officials over the best path forward for policy.
The Fed said it will maintain the pace at which it’s reducing bond holdings every month, letting excess liquidity continue to drain from the financial system.
Powell also made clear he believes the Fed can reduce the balance sheet — a process known as quantitative tightening — and lower rates at the same time.
“We’re not thinking about stopping runoff because of this,” he said. “We know that these two things can happen side by side, in the sense they’re both a form of normalization.”
The central bank has been
Jody Padar, an author and speaker known as “The Radical CPA,” and Katie Tolin, a growth strategist for CPAs, together launched a training and technology platform called XcelLabs.
XcelLabs provides solutions to help accountants use artificial technology fluently and strategically. The Pennsylvania Institute of CPAs and CPA Crossings joined with Padar and Tolin as strategic partners and investors.
“To reinvent the profession, we must start by training the professional who can then transform their firms,” Padar said in a statement. “By equipping people with data and insights that help them see things differently, they can provide better advice to their clients and firm.”
The platform includes XcelLabs Academy, a series of educational online courses on the basics of AI, being a better advisor, leadership and practice management; Navi, a proprietary tool that uses AI to help accountants turn unstructured data like emails, phone calls and meetings into insights; and training and consulting services. These offerings are currently in beta testing.
“Accountants know they need to be more advisory, but not everyone can figure out how to do it,” Tolin said in a statement. “Couple that with the fact that AI will be doing a lot of the lower-level work accountants do today, and we need to create that next level advisor now. By showing accountants how to unlock patterns in their actions and turn client conversations into emotionally intelligent advice, we can create the accounting professional of the future.”
“AI is transforming how CPAs work, and XcelLabs is focused on helping the profession evolve with it,” PICPA CEO Jennifer Cryder said in a statement. “At PICPA, we’re proud to support a mission that aligns so closely with ours: empowering firms to use AI not just for efficiency, but to drive growth, value and long-term relevance.”
The accountant the world urgently needs has evolved far beyond the traditional role we recognized just a few years ago.
The transformation of the accounting profession is not merely an anticipated change; it is a pressing reality that is currently shaping business decisions, academic programs and the expected contributions of professionals. Yet, in many areas, accounting education stubbornly clings to outdated, overly technical models that fail to connect with the actual demands of the market. We must confront a critical question: If we continue to train accountants solely to file tax reports, are we truly equipping them for the challenges of today’s world?
This shift in mindset extends beyond individual countries or educational systems; it is a global movement. The recent announcement of the
The CIMA/CGMA proposal for 2026 is not just a curriculum update; it is a powerful manifesto. This new program positions analytical thinking, strategic business partnering and technology application at the core of accounting education. It unequivocally highlights sustainability, aligning with IFRS S1 and S2, and expands the accountant’s responsibilities beyond mere numbers to encompass conscious leadership, environmental impact and corporate governance.
The current changes in the accounting profession underscore an urgent shift in expectations from both educators and employers. Today, companies of all sizes and industries demand accountants who can do far more than interpret balance sheets. They expect professionals who grasp the deeper context behind the numbers, identify inconsistencies, anticipate potential issues before they escalate into losses, and act decisively as a bridge between data and decision making.
To meet these expectations, a radical mindset shift is essential. There are firms still operating on autopilot, mindlessly repeating tasks with minimal critical analysis. Likewise, many academic programs continue to treat accounting as purely a technical discipline, disregarding the vital elements of reflection, strategy and behavioral insight. This outdated approach creates a significant mismatch. While the world forges ahead, parts of the accounting profession remain stuck in the past.
The consequences of this shift are already becoming evident. The demand for compliance, transparency and sustainability now applies not only to large corporations but also to small and mid-sized businesses. Many of these organizations rely on professionals ill-equipped to drive the necessary changes, putting both business performance and the reputation of the profession at risk.
The positive news is that accountants who are ready to thrive in this new era do not necessarily need additional degrees. What they truly need is a commitment to awareness, a dedication to continuous learning, and the courage to step beyond their comfort zones. The future of accounting is here, and it is firmly rooted in analytical, strategic and human-oriented perspectives. The 2026 curriculum is a clear indication of the changes underway. Those who fail to think critically and holistically will be left behind.
In contrast, accountants who see the big picture, understand the ripple effects of their decisions, and actively contribute to the financial and ethical health of organizations will undeniably remain indispensable, anywhere in the world.
Congressional Republicans are siding with Donald Trump in the messy divorce between the president and Elon Musk, an optimistic sign for eventual passage of a tax cut bill at the root of the two billionaires’ public feud.
Lawmakers are largely taking their cues from Trump and sticking by the $3 trillion bill at the center of the White House’s economic agenda. Musk, the biggest political donor of the 2024 cycle, has threatened to help primary anyone who votes for the legislation, but lawmakers are betting that staying in the president’s good graces is the safer path to political survival.
“The tax bill is not in jeopardy. We are going to deliver on that,” House Speaker Mike Johnson told reporters on Friday.
“I’ll tell you what — do not doubt, don’t second guess and do not challenge the President of the United States Donald Trump,” he added. “He is the leader of the party. He’s the most consequential political figure of our time.”
A fight between Trump and Musk exploded into public view this week. The sparring started with the tech titan calling the president’s tax bill a “disgusting abomination,” but quickly escalated to more personal attacks and Trump threatening to cancel all federal contracts and subsidies to Musk’s companies, such as Tesla Inc. and SpaceX which have benefitted from government ties.
Republicans on Capitol Hill, who had — until recently — publicly embraced Musk, said they weren’t swayed by the billionaire’s criticism that the bill cost too much. Lawmakers have refuted official estimates of the package, saying that the tax cuts for households, small businesses and politically important groups — including hospitality and hourly workers — will generate enough economic growth to offset the price tag.
“I don’t tell my friend Elon, I don’t argue with him about how to build rockets, and I wish he wouldn’t argue with me about how to craft legislation and pass it,” Johnson told CNBC earlier Friday.
House Budget Committee Chair Jodey Arrington told reporters that House lawmakers are focused on working with the Senate as it revises the bill to make sure the legislation has the political support in both chambers to make it to Trump’s desk for his signature.
“We move past the drama and we get the substance of what is needed to make the modest improvements that can be made,” he said.
House fiscal hawks said that they hadn’t changed their prior positions on the legislation based on Musk’s statements. They also said they agree with GOP leaders that there will be other chances to make further spending cuts outside the tax bill.
Representative Tom McClintock, a fiscal conservative, said “the bill will pass because it has to pass,” adding that both Musk and Trump needed to calm down. “They both need to take a nap,” he said.
Even some of the House bill’s most vociferous critics appeared resigned to its passage. Kentucky Representative Thomas Massie, who voted against the House version, predicted that despite Musk’s objections, the Senate will make only small changes.
“The speaker is right about one thing. This barely passed the House. If they muck with it too much in the Senate, it may not pass the House again,” he said.
Trump is pressuring lawmakers to move at breakneck speed to pass the tax-cut bill, demanding they vote on the bill before the July 4 holiday. The president has been quick to blast critics of the bill — including calling Senator Rand Paul
As the legislation worked its way through the House last month, Trump took to social media to criticize holdouts and invited undecided members to the White House to compel them to support the package. It passed by one vote.
Senate Majority Leader John Thune — who is planning to unveil his chamber’s version of the bill as soon as next week — said his timeline is unmoved by Musk.
“We are already pretty far down the trail,” he said.
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