The Fed’s Rate Cut Was Political — Not Practical
By Avil Soleiman
Broker | @Avil Soleiman Brokerage | DRE# 01968159
After holding firm for over a year, the Federal Reserve finally caved and dropped interest rates for the first time in 2025.
But let’s be clear — this wasn’t about sound economic policy. It was about political pressure.
According to the Fed’s own projections, two more rate cuts are expected before the end of the year. And frankly, I don’t believe they have the guts — or the justification — to follow through. But if they do? We’re opening the door to a serious economic mistake that could haunt us well into 2026.
Rate Cuts Under Pressure — Not Progress
This recent cut wasn’t driven by data. Inflation is still sticky. Consumer spending is erratic. GDP growth is hardly stable.
So why cut now?
The answer is simple: politics. The White House doesn’t want to head into an election year with high borrowing costs and unhappy voters. And the Fed — whether it wants to admit it or not — just handed the administration a gift. In the process, it compromised its independence.
Another Cut Could Backfire — Fast
Here’s the real danger: If the Fed cuts again in 2025 — as it claims it will — we could be setting ourselves up for a major correction in 2026.
Here’s why: Artificial Stimulus: Lowering rates when inflation isn’t under control creates a false sense of economic health.
Asset Bubbles: Cheap money fuels risky investing, inflated home prices, and unsustainable business growth.
Weakened Dollar: More cuts could devalue the dollar, increase import costs, and make inflation harder to manage.
Limited Ammo: If the economy actually slows in 2026, what tools will the Fed have left?
One more cut might win political points in the short term, but it risks shooting the economy in the foot long-term.
This Isn’t Just About Markets — It’s About Stability
If you’re a homebuyer or investor, you might be celebrating lower rates. But don’t mistake short-term gains for long-term stability.
Yes, borrowing might get cheaper. Yes, the stock market might see a temporary bump. But these are sugar highs — and we’ve seen what happens when they wear off.
The Bottom Line
The Fed already dropped rates once in 2025. That was arguably a mistake. If they go through with another cut — or two — this year, it’s not just questionable policy.
It’s a risk to the economy’s future.
We’re not stimulating a recovery. We’re artificially propping up an economy that hasn’t fully healed. And in doing so, we may be planting the seeds for a crisis in 2026.
This isn’t just speculation. It’s the cost of short-term thinking and politically driven decision-making.
Watch what the Fed does next.
The future of our economy depends on it.
Avil Soleiman
@Avil Soleiman Brokerage | DRE# 01968159