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WHY THE FED'S INFLATION METRIC FAILS PRICE-TO-INCOME TEST
Mint Chennai
|October 06, 2025
B ertie was on his annual visit to the Big Apple when the Federal Reserve cut rates by 25 basis points.
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When he was in the city a year earlier, the Fed had cut by 50 basis points. Give a man two dots on a piece of paper, and he will draw a straight line through them-Bertie is no different. He now thinks of his New York visits as harbingers of global easing.
A chuffed Bertie was holding forth on this theory to a friend who works in the tech sector. The friend seemed more concerned about the H-1B visa scare than about what the Fed was doing. He smiled distractedly and said, "They are cutting interest rates, are they?" Bertie nodded, with an unsaid 'Keep up, man!' in his head.
"Why are they cutting rates?" the friend asked, almost innocently. Bertie hadn't thought about this question, so he came back with a "Because I am here !" wisecrack and laughed rather more than it warranted.
This story is from the October 06, 2025 edition of Mint Chennai.
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