Last edited Mon Nov 3, 2025, 03:18 PM - Edit history (1)
The Fed first cut its target rate from its highs of the inflation era on 9/18/24. It was a half point cut from 5.5% to 5.0% (the upper bound of the quarter-point target range) . It is now 4.00% (again the upper bound), after the October 29 rate cut. So it's gone down by 1.50 percentage points, from 5.5% to 4.00%
Meanwhile, the average fixed 30-year rate on 9/15/24 was 6.17% to 6.32%, depending on the source. It is now 6.19%
The 10-year Treasury yield on 9/15/24 was 4.57%, it is now 4.10%. (it is often written that the 30-year mortgage rate and the Treasury 10-year yield are highly correlated).
There were periods after Fed rate cuts when long term rates increased, much remarked upon by the financial press - the reason being that bond traders feared the Fed rate cuts would increase economic activity enough to trigger more inflation down the road, thus propelling longer-term interest rates up. But overall, there's been a bit of a decrease in longer-term rates since the Fed began its rate cuts. Only a bit.
It's not clear what will happen to long-term rates when/if Fed rates are lowered more, despite the bally-hooing of Fed rate cuts by tRump and Besserk.
Inflation is increasing, despite the corporate media blathering about how September came in below expectations, and even (Yahoo Finance) that inflation is "tame" --
Over the last 3 months, both the CPI and the Core CPI have averaged 3.6% inflation at an annualized rate, 1.8 X the Fed's 2% goal.
Tame?
More graphs: See graphs at https://www.democraticunderground.com/10143552691#post10
Over 20 years, a 3.6% average annual inflation rate would cut the purchasing power of the dollar in half, meaning one's investments would have to double in order to just stay in place as far as purchasing power, as prices would double.
Edit - Egg-faced correction: at 3:00 PM ET I corrected the Fed rate from 4.25% to 4.00%. Also adding the Goolsbee article below
Chicago Federal Reserve president Austan Goolsbee said he is undecided about whether to cut interest rates again in December.
. . . noting that core inflation over the past three months has been running at 3.6% on an annualized basis, ... "That's worrying because that's going the wrong way,"
So, it's not just me that looks at the 3-month average. Fed chair Powell also mentioned the 3-months and 6-month averages being elevated back in December or thereabouts.
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