Fed Chairman Says ‘Time Is Right’ to Cut Interest Rates Amid Signs of Weakening Labor Market

Rachel Siegel:

Even though they left the door open to many options, there are definitely a few possible paths to consider here.

If central banks are really worried, if they start to see this accumulation of data suggesting that the labor market is not only slowing, but perhaps even collapsing under the weight of higher rates accompanied by rising unemployment or massive layoffs, they might decide to issue a half-point cut in September.

And not only would it be on a larger scale, but it would signal a deeper concern and a need to take that concern seriously, that they need to act and act quickly.

Or they could stick to a more typical quarter-point, which signals a little bit more of a calm approach, a gradual approach, and maybe plan for similar quarter-point cuts for the rest of the year.

You also hear some officials say that the exact size of the cuts at one meeting or another doesn’t really matter, but rather that they have set a path, they have a plan and they are really committed to implementing it.