Sun Sep 15 16:22:04 UTC 2024: ## Fed Expected to Cut Interest Rates This Week, But Impact on Housing May Be Limited

**WASHINGTON** – Former White House economic advisor Gary Cohn, now Vice Chairman of IBM, appeared on CBS’s “Face the Nation” on Sunday, discussing the Federal Reserve’s expected interest rate cut this week and its potential impact on the economy.

Cohn anticipates a 25 basis point cut this week, with further reductions totaling around 1% by year’s end. He explained that the Fed’s dual mandate – stable prices and full employment – is now shifting towards the latter, as inflation has cooled and unemployment has risen.

While the Fed’s move is expected to stimulate the economy, Cohn believes it will have a limited impact on housing costs, which are driven by longer-term interest rates that have already factored in the Fed’s actions.

Cohn expressed concerns about the growing number of credit card delinquencies, indicating consumer financial stress. He attributed this to a post-pandemic spending spree fueled by stimulus packages and a subsequent economic slowdown.

When asked about the Republican presidential candidate Donald Trump’s proposal to eliminate all taxes on overtime, income, payroll, and Social Security, Cohn acknowledged the appeal but questioned its feasibility. He highlighted the need for taxes to fund essential government functions like national defense and social services.

He cautioned against the idea of relying solely on tariffs to generate revenue, arguing that they can be effective in specific cases but are not a sustainable solution for financing the government. Cohn emphasized the importance of a balanced approach, utilizing tariffs strategically to protect American jobs while avoiding unnecessary inflation.

Regarding the upcoming expiration of the 2017 tax cuts in 2025, Cohn expects negotiations between the next president and Congress to be complex. He believes the political landscape, with growing opposition to large deficit-driven tax plans, will likely result in a more moderate approach to tax legislation.

Cohn concluded by saying that Congress is unlikely to approve the current tax proposals from both the Democratic and Republican presidential campaigns due to their high cost and potential for increased national debt.

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