The Federal Reserve voted to cut its target interest rate another 25 basis points, marking five consecutive reductions since September 2024—a total of 150 basis points over 13 months. Fed Chair Jerome Powell also announced that quantitative tightening (QT) will end December 1, with the Fed maintaining its current balance sheet and refocusing on U.S. Treasurys over mortgage-backed securities.
Ryan McMaken argues this marks a decisive shift away from the Fed’s stated two-percent inflation goal toward economic stimulus and debt accommodation. Historically, such sustained rate cuts without intervening hikes have coincided with recessions (2001, 2008, 2020).
McMaken notes Powell’s rationale—weak job growth, rising layoffs, and declining labor participation—contrasts with inflation data still well above the Fed’s target. Powell even suggested a new “inflation ex-tariffs” metric to justify easier policy, a move McMaken calls a political ploy to mask inflation persistence.
Despite official optimism, the Fed appears to be abandoning its inflation target to prioritize liquidity and employment, signaling the full return of easy money. Each new round of “easy money” may provide short-term relief to debt markets, but it erodes the long-term purchasing
power of the dollar. As monetary expansion accelerates and the Fed pivots from tightening to accommodation, gold stands to benefit as the only asset not diluted by policy decisions or balance-sheet expansion.
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