Delighted to be Wrong

I was wrong, the Federal Reserve has cut its benchmark interest rate by 50 basis points (½%) rather than my prediction of a 25 basis point cut.

I think that this was more of an accommodation of market expectations than it was concerns about employment:

The Federal Reserve voted to lower interest rates by a half percentage point, opting for a bolder start in making its first reduction since 2020. The long-anticipated pivot followed an all-out fight against inflation the central bank launched two years ago.

Eleven of 12 Fed voters backed the cut, which will bring the benchmark federal-funds rate to a range between 4.75% and 5%. Quarterly projections released Wednesday showed a narrow majority of officials penciled in cuts that would lower rates by at least a quarter point each at meetings in November and December.

Fed Chair Jerome Powell’s decision to trim rates by a larger amount than most analysts anticipated until just a few days ago moved the central bank unwaveringly into a new phase of its inflation battle: It is now trying to prevent past rate increases, which last year took borrowing costs to a two-decade high, from further weakening the U.S. labor market.

“We are committed to maintaining our economy’s strength,” Powell said at a news conference. “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained.”

In its policy statement, the Fed said the decision reflected “greater confidence that inflation is moving sustainably toward 2%” and that the central bank “judges that the risks to achieving its employment and inflation goals are roughly in balance.”

………

Some Republicans are upset that a rate cut might boost sentiment ahead of the November election. The rate cut is a sign the economy is “not good. Otherwise you wouldn’t be able to do it,” Trump said at a town hall on Tuesday night. Powell has said the Fed doesn’t take political considerations into account.

I'm surprised but pleased.