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Remember, the Fed doesn’t, in actuality, “set rates”, it follows and reacts to the market.

“Davidson” submits:

The history of Fed Funds adjustments vs the Discounted T-Bill Rate makes it clear that once the Discounted T-Bill rate has moved enough in any direction to provide the Fed room, it adjusts accordingly. Historically the Fed has required a premium of 0.1-0.2% but in recent years has been willing to move without a premium to the Discounted T-Bill Rate. Currently the Discounted T-Bill Rate is shifting lower and as of Aug 15 is 4.12%. The Fed could cut 0.25% this time as soon as the Discounted T-Bill Rate moves to 4.08%.

The Fed has demonstrated, over the past, its political nature takes precedence over economic analysis making sure it avoids criticisms that might result in any political actions upsetting its supposed independence. With pressure mounting from Fed Governors internally and Presidential/Congressional influences externally to lower rates, I believe it likely the Fed will cut the Fed Funds Rate as soon as the Discounted T-Bill Rate reaches the 4.08% range., 0.04% lower from the current level.

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