The Fed cuts rates at the expected 0.50%. equites and the USD sell off, oil rallies. There is no deflation in the U.S., the larger cut could be a precursor to the deep Chinese recession. Stagflation is back on the table as a possibility, pertaining to stagnated growth, high unemployment and a possible oil shock.

 

The Federal Reserve Bank cut rates at 0.50%, as expected, despite some economists believing that they would cut at 0.25%.   The larger cut doesn't really make sense, any more than an expectation that America is falling into deflation, it is not.  Or the Fed is aware that China is facing a deeper recession, hence cutting rates big on a prelude.  Regardless, inflation has not abated in the U.S. re: housing, food and energy costs are increasing, and one cannot rule out an oil shock if the U.S. State Department is unable to hold Israel back from its aggressive military policies towards Iran and its proxies.  An all out war in the region cannot be ruled out.

News headlines from the last 2 days:

• Dollar claws back losses after Fed goes big on rate cut - Reuters

• Why the Federal Reserve has gambled on a big interest-rate cut.  The bold move carries economic and political risks - The Economist

• Nearly Half of Renter Households Are Cost-Burdened, Proportions Differ by Race - census.gov

• What's up with high food prices? Economists assess factors causing food prices to fluctuate - phys.org

• Electricity prices are on the rise. Is it inflation or an underlying issue? - CBS

• As Fed Readies Potential Rate Cut, JPMorgan CEO Jamie Dimon Warns Of ‘Stagflation’ - Forbes