Saved by the bell. Or, Moody’s to be exact.
Fed Chairman J. Powell just had the best Monday in quite some time. He woke up to Moody’s cutting America’s credit rating a notch. Yup, a big sigh of relief came over the Fed Chairman as he headed for breakfast. Why? He won’t be facing a scolding by President Trump for not lowering interest rates. Nope. By Moody’s chopping our credit rating down from AAA interest rates ticked up and postponed any talk of rate cuts.
Even better. Should J. Powell had even thought it might be prudent to raise rates a touch with the threat of higher inflation caused by tariffs, he’s been bailed out. Moody’s did it. Moody’s made him push off any thoughts of easing rates until at least later this year. That big old mean President won’t be on his case for a while. Happy Monday it is.
Ah, but by later in the day, interest rates actually ticked down a bit. Leave it to the wacky financial market traders to spoil a great Monday. Being a Federal Reserve Chairperson is not as much fun as it used to be. It was a real ‘cushy’ job a few years ago. Take interest rates to zero, print tons of money, tell everyone that any inflation (yeah, we caused that) is transitory and be hailed as a hero. Even when the Fed jacked rates up quickly, J.P. got credit for ‘fixing’ their own problem. It was good to be a Fed Chairman.
But now the Fed Chairman (and committee) has to actually work. With a boss (Trump) constantly demanding an interest rate cut, trying to figure out “dancing tariffs,” tax cut legislation and financial markets defying normal thinking is hard work. And now, a credit rating cut, too.
So, will Moody’s actually bail out J.Powell? Will interest rates actually tick back up? Decline? Will inflation roar back with tariffs? Will tariffs be lifted? Increased? Will Trump “get off J.P’s back?”
I recommend the Fed Chairman speak with a very good and smart friend of mine (Antonio) who has a superb Italian restaurant in Chicago. Antonio would tell J.P “the markets she-is-a-gonna-go-up, the markets she-is-a-gonna-go-down. Have some pasta and relax.”
