On October 8, Neel Kashkari, President of the Minneapolis Federal Reserve (non-voting member), issued a serious economic warning that sent shockwaves across global markets. He cautioned that if the Fed lowers interest rates too aggressively, it could fuel inflation instead of boosting growth đŹđ
đ As soon as the remarks were made, U.S. stock markets reacted sharply â the Dow Jones dropped nearly 200 points, and the Nasdaq also plunged, sparking panic among investors.
Key Point 1: Kashkari said rapid rate cuts could overheat the economy, pushing prices higher. U.S. inflation remains above the Fedâs 2% target, and job growth is sluggish â only 17,000 new jobs predicted in September, the weakest in months. Lowering rates now would be like giving a tired runner energy drinks: short-term boost, long-term damage đđš
Key Point 2: He also raised concerns about stagflation â where prices rise while growth slows. With the U.S. government shutdown from October 1 delaying key data, consumers may face higher costs for essentials like groceries and rent while jobs become harder to find đžđ„Šâœ
Meanwhile, the Fed is divided: some want fast cuts, others prefer gradual easing. Markets expect a 25 bps cut in October, but the risk is high â inflation vs. recession â ïž
đ§ Investor Insight: If stagflation hits, saving smartly and controlling daily expenses becomes crucial. Prioritize essentials, avoid unnecessary spending, and protect your capital!
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