The talk about the Federal Reserve possibly cutting its base interest rate by 0.5% feels completely off to me. It’s not only unnecessary but a wrong move given where we are right now. The Dow is hitting record highs, inflation is out of control, and real estate is at its peak. Cutting rates right now would only fuel the issues we’re already dealing with.
The Current Economic Reality
We all know the Dow is up. Investors are feeling good, companies are growing, and it seems like the economy is solid. But inflation? It’s hitting all of us hard. I don’t need the Fed to tell me about inflation—I see it every time I go to the store. The cost of buying food for my family has doubled compared to 2020. It’s not just gas or housing; it’s everything. Prices are through the roof, and cutting interest rates is only going to make that worse.
Then there’s real estate. Prices are at an all-time high, largely driven by these already-low interest rates. If we lower rates further, it’ll just push home prices even higher, making it impossible for people to afford a place. We don’t need more demand right now. The demand is already outpacing the supply, especially in housing.
Why a 0.5% Rate Cut is Dangerous
Cutting the interest rate by 0.5% is a big deal. This is the kind of move we usually see when things are really falling apart, signaling that the Fed thinks we need drastic action. But that’s not where we are today. The economy isn’t in a state of emergency. The only sectors really hurting right now are commercial real estate and the banks, and their problems are structural, not liquidity-based.
If the Fed goes ahead with this cut, it sends the wrong message. It will make people think the economy is in worse shape than it actually is. And the fallout? We could see corrections in areas that don’t even need them, which could spiral into new problems.
Who Wins? Banks and Commercial Real Estate
Let’s be honest here—the main winners from this move would be the banks and commercial real estate investors. Banks have a ton of bad debt tied to commercial real estate, which has taken a hit with office vacancies and retail struggles post-pandemic. Lowering rates would prop up the value of these commercial assets, making their balance sheets look better.
In reality, this move seems more about bailing out the banks and commercial real estate investors than helping the average person. The issues they’re facing won’t be solved by a rate cut. People are working from home, retail is moving online—these are permanent shifts. Throwing a rate cut at them just kicks the can down the road.
Conclusion: This is Not the Right Move
To wrap this up, a 0.5% cut from the Fed is a mistake. We don’t need drastic measures right now. The stock market is strong, inflation is already out of hand, and housing is too expensive. The only ones who would benefit are the banks and commercial real estate players, not the people who are already struggling with higher prices.
What we need is stability, not more intervention. Let’s avoid pushing already overheated markets even higher, and stop sending signals that make things seem worse than they are. We’ve got bigger issues to deal with, and the rate cut isn’t the answer.
