Why the Fed Cut Rates: To Try to Fix Last Year’s Mistake

Not a recession-fighting measure per se, but a recalibration of strategy, and a recognition that the world has changed.

Several of the questions directed at Jerome Powell at his Wednesday afternoon news conference boiled down to this: Why did you just cut interest rates when, by your own acknowledgment, the American economy looks perfectly solid? What good can this possibly achieve?

Mr. Powell, the Federal Reserve chair, answered by ticking off the reasons — persistently low inflation and a troubled world economy that poses risks to the United States — for the Fed policy committee’s move.

But there is a broader way to interpret it.

View the complete July 31 article by Neil Irwin on The New York Times website here.