Neil Irwin

I'm Neil Irwin.

I'm the chief economic correspondent at Axios.

question has been, how much do you cut interest rates?

You know, the Fed, when inflation was roaring, they raised interest rates a lot, up to almost 5.5%.

And then they've been kind of steadily bringing them back down.

And what we have is this moment where there's still high inflation, there's tariffs coming through the system, the economy looks a little shaky, the job market looks a little shaky.

The president is hammering the Fed every other day to cut rates, cut rates, cut rates.

And the challenge for Jay Powell and the Federal Reserve is, do we do it?

Do we do a third interest rate cut this year?

And does that give consumers and businesses some relief from these high interest rates of the last few years?

So they lowered their target interest rate.

This is kind of the baseline interest rate that affects rates across the economy by a quarter percentage point.

That was the third quarter point cut this year.

They did another percentage point of cuts last year.

So, you know, all in all, we're down one and three quarters percent from where things were back during the great inflation.

And, you know, what they did is the reason they did it is because they see some evidence that the job market is starting to crack a little bit.

And they think that even to the degree inflation is a problem, it's a temporary problem.

This tariff pass-through is going to come and go and affect prices in a one-time way, not in an ongoing inflationary way.

And therefore, they think it's time to lower the dial, make interest rates a little lower, and therefore help the economy along as the job market stumbles.

There's two sides to this.