The Federal Reserve's Jumbo Rate Cut Comes With a Big Risk

The Federal Reserve's much-anticipated interest rate-cutting campaign started with a bang after Jerome Powell and the Federal Open Market Committee (FOMC) elected to lower the target range of the benchmark federal funds rate by a half-point, much to the market's delight.After an aggressive rate-hiking campaign over the last few years, the market has been waiting for the Fed to cut, a scenario that typically favors equities. That might explain why the stock market has been hitting fresh highs all year. But while investors were pleased, the Fed's jumbo rate cut comes with a big risk. Let's take a look.The Fed's dual mandate includes controlling prices (inflation) and maintaining stability in the labor market. Over the past few years, unemployment has been at historic lows, while inflation hit a four-decade high at one point. The Fed embarked on an aggressive rate-hiking campaign to rein in inflation and moderate the red-hot economy.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool