Day: August 5, 2024

Prominent financial analyst Robert Prechter says he believes the Federal Reserve will make the rare move of implementing an emergency rate cut ahead of its September meeting, reacting to markets reeling in a broad global selloff on Monday.

Prechter, the founder and president of Elliott Wave International and the author of “The Socionomic Theory of Finance,” told FOX Business‘ “Cavuto: Coast to Coast” he expects the central bank to make the unorthodox move of a cut between meetings after missing its chance to do so at its official gathering last week.

The market guru told warned Cavuto back in January about the dangers of extreme market optimism, and said Monday that optimism is now “entrenched” and we are seeing “the most overgrown market ever.”

“The Federal Reserve had a wonderful opportunity last Wednesday to lower their Fed funds rate by a quarter point; they didn’t take it,” Prechter said. “I think that was a big mistake.”

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He said central banks follow the free market interest rates with an average lag time of five months, and the Fed decided to do the usual lag time despite the fact that the three-month Treasury bill had gone from a 5.5% yield down to under 5.2%.

“So they really had a big chance there to lower their Fed funds rate. They didn’t take it,” he reiterated. “I think there’s gonna be a surprise rate cut before the September meeting because I think rates have started falling faster.”

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Emergency rate cuts by the Fed are highly unusual. The last time the central bank made such a move was during the height of COVID, amid fears of a global economic collapse.

But Monday’s massive selloffs triggered increased chatter over the possibility of an emergency cut, as markets tumbled.

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Many economists argue a rate cut is highly unlikely as it would signal the U.S. and the global economy are in terrible shape — and it would also signal the Fed made a major miscalculation — which would further spook investors.

FOX Business’ Suzanne O’Halloran contributed to this report.

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Vice President Harris’ past comments about the impact of inflation on American consumers and how the Biden-Harris administration would address it are resurfacing in the wake of her becoming the Democratic Party’s presumptive presidential nominee.

Harris spoke at a press conference on Nov. 12, 2021, and was asked about the administration’s plans to prevent spending under the Build Back Better agenda from exacerbating inflation and the administration’s other efforts to prevent prices from rising.

As of November 2021, inflation had reached 6.8% year-over-year and would continue to rise to a 40-year high of 9.1% in June 2022. Her remarks followed Congress’ passage of the $1.2 trillion Bipartisan Infrastructure Law and the enactment of Democrats’ $1.9 trillion American Rescue Plan Act and came as the Democrat-controlled House prepared to vote on the $2.2 trillion Build Back Better Act.

“Let’s start with this: Prices have gone up, and families and individuals are dealing with the realities of — that bread costs more, that gas costs more,” Harris said. “And we have to understand what that means. That’s about the cost of living going up. That’s about having to stress and stretch limited resources. That’s about a source of stress for families that is not only economic but is on a daily level something that is a heavy weight to carry.” 

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“So that is something that we take very seriously, very seriously. And we know from the history of this issue in the United States that when you see these prices go up, it has a direct impact on the quality of life for all people in our country. So it’s a big issue, and we take it seriously, and it is a priority, therefore,” Harris explained.

“So we have addressed it in a number of ways. One of the issues that we know is related to this is the supply chain issue that we just discussed. So on a domestic level, in terms of domestic policy, one of the approaches we have taken is to work with labor unions and to work with municipalities in opening back up and extending the hours of our ports,” she said.

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Harris noted the administration’s work to extend the operational hours of ports in Los Angeles and Long Beach in California and Savannah, Georgia, to help address a backlog of container ships waiting to be offloaded amid a pandemic-induced supply chain glut that was contributing to inflation. She went on to tout the Biden-Harris administration’s Build Back Better proposal as a means of lowering costs for Americans.

“There is also a point that is important to make on the Build Back Better framework. One, it is designed to make it less expensive for working people to live. It was specifically designed to bring down the costs of child care and increase accessibility and availability. Designed to bring down the cost of elder care and make it available to all the working families that need that support and need that help,” she said. 

“And, Build Back Better is not going to cost anything — we’re paying for it. So when we can get Build Back Better passed, and we are optimistic that we will, the American people will see costs actually reduced around some of the most essential services that they need to take care of their basic responsibilities, including issues like child care and elder care, and also preschool,” Harris said. 

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Her remarks preceded House Democrats’ passage of the $2.2 trillion Build Back Better Act the following week, although that bill stalled in the Senate amid opposition from Sen. Joe Manchin of West Virginia — a moderate senator who was a Democrat at the time but would eventually change his affiliation to Independent in June 2024.

After the Build Back Better Act faltered, the proposal was later reworked as the slimmed-down $1.2 trillion Inflation Reduction Act, which passed both the Democrat-controlled House and Senate on party-line votes through the reconciliation process. 

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Notably, Vice President Harris cast the tiebreaking vote for the Inflation Reduction Act in the Senate on its way to becoming law.

FOX Business reached out to a Harris spokesperson for comment.

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