Finance
Fed rate decision November 2024:
The Federal Reserve approved its second consecutive interest rate cut Thursday, moving at a less aggressive pace than before but continuing its efforts to right-size monetary policy.
In a follow-up to September’s big half percentage point reduction, the Federal Open Market Committee lowered its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points, to a target range of 4.50%-4.75%. The rate sets what banks charge each other for overnight lending but often influences consumer debt instruments such as mortgages, credit cards and auto loans.
Markets had widely expected the move, which was telegraphed both at the September meeting and in follow-up remarks from policymakers since then. The vote was unanimous, unlike the previous move that saw the first “no” vote from a Fed governor since 2005. This time, Governor Michelle Bowman went along with the decision.
The post-meeting statement reflected a few tweaks in how the Fed views the economy. Among them was an altered view in how it assesses the effort to bring down inflation while supporting the labor market.
“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the document stated, a change from September when it noted “greater confidence” in the process.
Fed officials have justified the easing mode for policy as they view supporting employment becoming at least as much of a priority as arresting inflation.
On the labor market, the statement said “conditions have generally eased, and the unemployment rate has moved up but remains low.” The committee again said the economy “has continued to expand at a solid pace.”
Officials have largely framed the change in policy as an attempt to get the rate structure back in line with an economy where inflation is drifting back to the central bank’s 2% target while the labor market has shown some indications of softening. Fed Chair Jerome Powell has spoken of “recalibrating” policy back to where it no longer needs to be as restrictive as it was when the central bank focused almost solely on taming inflation.
Powell will answer questions about the decision at his 2:30 p.m. ET news conference. The November meeting was moved back a day due to the U.S. presidential election.
There is uncertainty over how far the Fed will need to go with cuts as the macro economy continues to post solid growth and inflation remains a stifling problem for U.S. households.
Gross domestic product grew at a 2.8% pace in the third quarter, less than expected and slightly below the second-quarter level, but still above the historical trend for the U.S. around 1.8%-2%. Preliminary tracking for the fourth quarter is pointing to growth around 2.4%, according to the Atlanta Fed.
Generally, the labor market has held up well. However, nonfarm payrolls increased by just by 12,000 in October, though the weakness was attributed in part to storms in the Southeast and labor strikes.
The decision comes amid a changing political backdrop.
President-elect Donald Trump scored a stunning victory in Tuesday’s election. Economists largely expect his policies to pose challenges for inflation, with his stated intentions of punitive tariffs and mass deportations for undocumented immigrants. In his first term, however, inflation held low while economic growth, outside of the initial phase of the Covid pandemic, held strong.
Still, Trump was a fierce critic of Powell and his colleagues during his first stint in office, and the chair’s term expires in early 2026. Central bankers assiduously steer clear of commenting on political matters, but the Trump dynamic could be an overhang for the course of policy ahead.
An acceleration in economic activity under Trump could persuade the Fed to cut rates less, depending on how inflation reacts.
Questions have arisen over what the “terminal” point is for the Fed, or the point at which it will decide it has cut enough and has its benchmark rate where it is neither pushing nor holding back growth. Traders expect the Fed likely will approve another quarter-point cut in December then pause in January as it assesses the impact of its tightening moves, according to the CME Group’s FedWatch tool.
The FOMC indicated in September that members expected a half percentage point more in cuts by the of this year and then another full percentage point in 2025.
The September “dot plot” of individual officials’ expectations pointed to a terminal rate of 2.9%, which would imply another half percentage point of cuts in 2026.
Even with the Fed lowering rates, markets have not responded in kind.
Treasury yields have jumped higher since the September cut, as have mortgage rates. The 30-year mortgage, for instance, has climbed about 0.7 percentage point to 6.8%, according to Freddie Mac. The 10-year Treasury yield is up almost as much.
The Fed is seeking to achieve a “soft landing” for the economy in which it can bring down inflation without causing a recession. The Fed’s preferred inflation indicator most recently showed a 2.1% 12-month rate, though the so-called core, which excludes food and energy and is generally considered a better long-run indicator, was at 2.7%.
Finance
Buffett denies social media rumors after Trump shares wild claim that investor backs president crashing market
Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.
Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.
“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.
The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”
The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.
Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.
“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.
CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.
‘A tax on goods’
While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”
“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”
During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.
“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”
Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail.
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