Federal Reserve to cut interest rates amid uncertainty

The Federal Reserve is expected to lower interest rates two more times this year, according to Fed Chair Jerome Powell. This news has eased concerns among investors worried about a potential recession or "stagflation." Experts believe the central bank's view on inflation, which it sees as temporary due to tariffs, has provided some reassurance. Powell's comments suggest that the Fed will maintain its current forecasts until there is more clarity in the economy. He acknowledged the uncertainty surrounding trade policies, especially under the Trump administration. Rick Rieder from BlackRock emphasized the need for time and data to understand the Fed's next steps. While recent inflation data showed some slowing, analysts are cautious. There is concern that the Fed may cut rates further due to a weak labor market and slowing economic growth, which may not be beneficial for investors. Ken Mahoney from Mahoney Asset Management warned that while rate cuts might seem appealing, they could signal deeper economic problems. Market reactions to the Fed's announcements were mixed. Although there was an initial rise in stock prices, major indexes fell soon after. The S&P 500 and Dow managed slight gains over the week, while the Nasdaq struggled to perform well. Investment strategist Ross Mayfield advised focusing on company earnings and market fundamentals rather than solely on the Fed's actions. Overall, uncertainty remains high, and many are waiting for new economic signals, such as upcoming earnings reports or jobs data, to guide the market.