Trifecta of Fed Rate-Cut Regret Is an Illusion
Strong payrolls, retail sales and inflation numbers make September’s 50-basis-point policy easing look like a bad idea in hindsight. The optics are misleading.
A good-bad retail sales number.
Photographer: Michael Nagle/Bloomberg
We’ve had several weeks of strong data since the Federal Reserve cut policy rates by a half percentage point. It started with a surprisingly robust jobs report, followed by a janky and above-expectations inflation report. Thursday’s above-consensus retail sales numbers complete the trifecta, further fueling the narrative that central bankers erred in cutting policy rates as much as they did last month and risk reigniting inflation.
That’s the wrong takeaway, and the resultant spike in bond yields may well prove fleeting — at least if elections and geopolitics don’t get in the way.