Why the Fed almost certainly isn't going to do an emergency rate cut

Stocks closed lower for the second consecutive day as concerns over a potential recession in the US economy persist. The weak jobs report released on Friday has raised questions about the need for the Federal Reserve to implement an emergency rate cut. However, experts have noted that an unscheduled rate cut would not be in line with the Fed’s mandate. While there is hindsight suggesting that a rate cut may have been appropriate at the recent meeting, holding an unscheduled meeting now would only exacerbate panic. Emergency rate cuts are rare and would send alarming signals to the market. Optics are critical, and the Fed would not want to create the impression of a pending recession. Furthermore, it is uncertain whether an immediate rate cut would have a significant impact on the economy. The effects of rate cuts take time to materialize, and Treasury yields have already been declining in anticipation of rate cuts.