Name: The Fed Just Decided To Cut Rates - What They’re NOT Telling You
Uploaded: 2025-08-08T18:32:44.000Z
Duration: 8 min 59 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Transition words & phrases

I find it really fascinating that the federal reserve refused to lower interest rates because we have massive inflation and inflation is rising.

Adverbs of manner

And then suddenly Donald Trump visits the federal reserve and pushes J-poll to lower down interest rates.

Adverbs of degree

And then a couple of weeks later, we have disastrous jobs reports that gives the federal reserve a very good reason to lower down interest rates.

Donald Trump has been attacking J-poll for the last 6 months, I would say, in order for him to lower down interest rates.

The federal government is paying almost a trillion dollars in interest rate because it's refinancing its debt.

But if the fed would lower down interest rates, then that will cost the government hundreds of billions of dollars to say the least.

But the fed did not do that because it was afraid that inflation is getting out of hand.

And if you look at the inflation data, it is very clear that inflation is rising.

But after jobs reports, everybody, JP Morgan, Citigroup, Chase, everybody is just expecting that the federal reserve will lower down interest rates in this September.

Prior to that, all their expectations was that it might happen by the end of the year if inflation is going to cool down because we still don't know the final effects of the tariffs on the consumer prices.

The fed cannot possibly lower down interest rates just because the white house said so because it will lose all of its credibility.

The entire bond market of the United States, that's the foundation of the global economy, is based upon the fact that the federal reserve is an independent entity that does not follow the whims and desires of the white house.

If that's not the case, nobody is going to buy the US debt, nobody is going to invest in a 60 trillion dollar US government or the US debt market.

But now they have a very good excuse, a very good reason.

We won't lower down the interest rates because Trump said so but rather because we have very bad jobs reports and inflation or the economy is tanking into a recession, so we gotta do something.

In fact, if you look at the history of the United States or the federal reserve, find out that the main job of the fed has always been stable prices and maximum employment was the responsibility of the government and not the federal reserve.

In fact, if you simply go back to the 1970s, when the United States was facing a stagflation, Paul Walker was elected to become the chairman of the fed and he instantly raised the interest rates to 13 percent back in 1974 to fight inflation finally.

But that high interest rate led to some of the highest unemployment in the history of the United States.

The unemployment back in 1970s was much higher than it was at the peak of the 2008 financial crisis.

So, the congress passed a law, they called it Federal Reserve Reform Act in 1977 and decided that it's not enough for the federal reserve to have the responsibility of stable prices but it also should think about maximum employment.

And that's when the terminology of dual mandate actually came from.

That from now onwards, the fed should not just focus on stable prices but also to make sure that the government or the economy is at the maximum employment and the economy keeps growing.

And that's the balance that the fed has been trying since then.

He raised the interest rates after that to almost 20 percent to fight inflation.

But since then, we had the absolute policy of maintaining the dual mandate.

On one side, maximum employment, on the other side, stable prices.

And if you actually pay attention on how the federal reserve has been deciding to either increase or lower down interest rates, you will see that the jobs report played the most important role.

When the economy crashed in 2008, the federal reserve lowered down interest rates to almost 0 percent.

However, in 2009, they revised the jobs report for March and they realized that it was negative 900 thousand jobs.

And that's when the federal reserve decided that it's not enough to lower down interest rates because we have lowered them down and the employment is not rising and that's when the federal reserve invented quantitative easing and started massively buying securities in the open market.

To give you a couple more examples, they all started after 2020 because there was a very long period of peace and the federal reserve either kept the interest rates at the bare minimum or it has risen them but that rise wasn't that much.

See, if you go back for example in 2020, in March and April, they revised the numbers and they said that actually the real jobs have been negative by 642 thousand and that meant that the federal reserve should have actually kept the interest rates low.

But because interest rates were already low and the federal reserve was already buying massively securities in the open market, there wasn't much that the federal reserve could do.

But here is where the interesting thing actually starts.

If you go back to the February of 2020, there was a revision in the jobs, and they said that actually in November and December, we have underestimated the jobs report and we have added an extra 709 thousand jobs.

That means that the economy is very strong and it's time maybe to hike the interest rates.

So if we got the report by February about December and November of the previous year, so in February, the federal reserve decides to hike the interest rates because the labor market is very strong, although that there were very clear signs that inflation is rising as well.

Now, if you actually move forward with that, you will see another very clear example.

In August 2024, when interest rates were 5.5 percent, they have revised the annual jobs reports and realized that they have overestimated the numbers, so they cut the numbers by 818 thousand.

And that meant that the economy is slowing down, people cannot possibly find jobs.

And maybe this is the time to lower down interest rates to give the economy that boost and meet the requirement of a dual mandate, not just stable prices, but also maximum employment.

And that's why right after that report, they lowered down the interest rates from 5.5 percent to 4.5 percent.

And now we are pretty much at the exact same scenario that they have revised the data for May and June, and they said that we have actually added or overestimated the numbers by 258 thousand jobs.

The real numbers are much lower than that, and the labor market is weakening very strongly.

So if you actually look at what has been happening over the last couple of decades, you could actually say that the jobs report probably has been the most accurate indicator of the Fed's actions.

If the jobs report weakened, then the federal reserve rises, lowers down interest rates, and vice versa.

When jobs reports get very strong and inflation high, that's when the federal reserve increases the interest rates.

Donald Trump has been attacking Jay Paul since he took office, but he made it so clear that he wants lower interest rates that he went to the federal reserve and this is what he said.

He doesn't care about the construction in the federal reserve, he doesn't care about anything related to that, all he wants is lower down interest rates.

But if the chairman of the Fed would have given up to what Trump has said, then nobody would trust the Fed, but now the federal reserve has a very good reason to do that.

Yes, in September, most likely, I would assume that the chances that they will lower down interest rates is increasingly high.

And they will say, yes, we have slightly higher inflation, inflation is about 2.8 or 2.9 percent, but we have dual mandates, so we have to lower down interest rates in order to make sure that the jobs market stays strong.

So we are going to balance between the maximum employment and stable prices.

Even though that I believe that it's still too early to lower down interest rates because inflation must be beaten in the first place, most likely, the federal reserve has already decided based on this data that in September, the rates are going to be cut.

And if that happens, that means that cheap money is coming again to the stock market, which means that we are going to see a certain stocks to rise dramatically, especially tech stocks.

So make sure that you take advantage out of it.

And if you are new to the market, then make sure to check the first link in the description of this video.

Or if you want to know how exactly I invest and what's my investing strategy, again, you can find all of that by checking the first link in the description of this video.

Thanks for watching and I will see you in the next one.