Since today is both hump day and rate cut day, we reached out to senior business correspondent Christine Romans to share her report from her meeting with Chairman Jermon Powell. Her takeaway? There appears to be no silver bullet for some of the economic problems affecting everyday people. But the Fed has to do something, so we’re here.
However, if you are visiting the United States from abroad and see suspicious posts on social media, you may want to reconsider your travel plans. Here’s The Scoop spoke with Julia Ainslie, who is reporting on a new social media policy that could affect many travelers to the United States.
Today’s newsletter was created in collaboration with Senior Editor Michelle Garcia. Let’s get started.
We hope you enjoyed your free trial of our new subscriber-only newsletter. Subscribe to NBC News and get full access, plus ad-free articles, podcasts and exclusive video briefings.
first things first
As expected, the Fed cut interest rates by a quarter of a point this afternoon in an effort to stabilize a weak labor market without stimulating inflation.
Members of the Federal Reserve are attempting a considerable challenge.
“There is no risk-free policy path to navigating this tension between employment and inflation targets,” Fed Chairman Jerome Powell said at a press conference. “Our duty is to ensure that one-off price increases do not become ongoing inflationary problems.”
Is the math correct?: Given the six-week government shutdown earlier this fall, the economic data on which these decisions are usually based is a little murky this time around. Federal offices that chart important information such as the unemployment rate and the consumer price index remained closed throughout October. That has forced today’s voting Fed members to rely on alternative sources of data showing the job market slowing.
“The data looks good, consumers are resilient, small businesses are resilient, but their ability to withstand increased stress is diminishing,” JPMorgan Chase executive Marian Lake told NBC News yesterday.
This is the third time the Fed has cut interest rates this year, but the decision was not unanimous. This is quite unusual for a nearly unified board. Two senators wanted no reduction, but Stephen Milan, who is on temporary leave from the White House, voted in favor of a 0.5-point reduction.
Why it matters: Part of the Fed’s job is to keep us out of a terrible job market. One way board members do this is by adjusting interest rates up or down, making it cheaper or more expensive to borrow cash.
Speaking of which, the rate cut is also likely to lower interest rates on loans for big purchases like cars and mortgages. So if you have enough money for a down payment on a home, now might be the time.
But Christine Romans, who attended the Fed’s press conference, asked Powell whether this would help people looking to buy a home. Powell said he does not expect immediate relief for homebuyers because there are so many factors at play when it comes to the housing market.
“The housing market faces some very significant challenges,” Powell told her. “I don’t know if a 0.25 basis point drop will make a big difference for people. Housing supply is in short supply.”
(In fact, the housing market here is so tough that the average age of first-time homebuyers is 40, the highest it’s ever been. I like the idea that 40 is the new 30, but I might be different on this one.)
There are also concerns about inflation. The president said in Pennsylvania last night that inflation is no longer a problem, but the inflation rate is 2.8%, meaning prices are still slightly higher than a year ago and above the Fed’s 2% target.
The Personal Consumption Expenditure Price Index (another very good and apparently up-to-date data set that the Fed uses as an inflation indicator) shows that people’s spending has remained relatively flat for the past few months. Even if it cuts rates, the Fed is wary of sustaining inflation, and experts say it may not cut rates again for some time.
Chairman Powell said today that the Board expects inflation to fall to 2.3% next year. He told Christine that as his term ends in May, he is focused on passing on a strong economy and stable inflation to his successor.
inside scoop
The United States could require foreign tourists to share five years of social media history with the federal government before entering the country. U.S. Customs and Border Protection yesterday issued a 60-day notice in the Federal Register seeking public comment on the plan, so it is not final and is subject to change. CBP said this potential change is in line with an executive order issued in January to collect information on foreign visitors applying through the U.S. Visa Waiver Program.
As part of the program, which targets people in countries including the United States, Japan, Australia and France, travelers will be asked to share their email addresses, phone numbers, family names and information, and social media information from the past 10 years. For more information about this plan, we reached out to Julia Ainslie, senior correspondent for the Department of Homeland Security.
by the way
🛢️ Attorney General Pam Bondi confirms that the United States has seized an oil tanker off the coast of Venezuela as the country continues to expand its military presence in South America.
🌍 During an affordability rally in Pennsylvania, President Trump described Somalia as “filthy, dirty, disgusting, and crime-infested” and asked why more people aren’t moving to the United States from Norway, Sweden, and Denmark instead.
📚 Sophie Kinsella, author of the bestselling ‘Shopaholic’ novels, has died at the age of 55, just 18 months after revealing she had an aggressive brain tumor.
🗳️ Eileen Higgins becomes Miami’s first Democratic mayor in nearly 30 years, giving the national party a boost before the midterm election cycle begins.
💸The Department of Education will end the massive student loan forgiveness program launched by President Joe Biden.
👩🏼⚖️ The Army Special Counsel’s Office announced yesterday that an Army gynecologist has been criminally charged following an investigation into allegations he secretly videotaped patients during exams.
⚽ Egypt and Iran are not happy about being paired in a match with an LGBTQ Pride theme during the upcoming World Cup matches in Seattle.
✒️ In 2023, the State Department adopted Calibri, a typeface that is easier to read for some people with disabilities. Secretary of State Marco Rubio has rejected “immoral, radical and wasteful” diversity, equity, inclusion and accessibility initiatives and ordered a return to the “more formal” Times New Roman.
👠 Former “Real Housewives of Salt Lake City” star Jen Shah was released from federal prison today, more than four years early from a six-and-a-half year sentence. She leaves behind her prison companions Ghislaine Maxwell and Elizabeth Holmes.
Thank you for reading. Subscribers, see you tomorrow.
