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Illustration: Rebecca Zisser/Axios
Axios' Courtenay Brown writes: Low inflation may sound good to consumers, who like what it suggests about the prices they'll pay. But the Federal Reserve — which will likely cite the lack of meaningful price increases as a motive for cutting interest rates today — has reasons for concern.
Why it matters: Inflation has come in below the Fed's "sweet spot" — 2% inflation — throughout much of the record-long economic expansion, and consumers have benefited from low prices accompanied by low borrowing costs.
What's happening: The Fed's preferred measure of inflation came in at an annualized pace of 1.6% in June — below the 2% target, though a rebound from prior months. Indeed, the Fed "has failed to convincingly reach the goal" since formally adopting its inflation policy in 2012, despite already low interest rates, the Wall Street Journal points out.
The fear of higher inflation may feel like more of a risk, because it's more recent in consumers' memory. By contrast, the last deflationary period in the U.S. was in the 1930s.
Courtenay writes: Powell has spoken a lot about the risk of inflation overshooting its 2% target, but only recently has he discussed the risk of a persistent undershoot.
The bottom line: Economists are wary that a 25 basis point cut — which many people expect the Fed to announce today — will be enough to trigger the type of inflation the Fed wants to see in order to prove that its 2% target is not, in fact, a ceiling.
Since 2014, credit card interest rates have risen 4.4 percentage points, representing a 35% increase in costs for consumers, data from NerdWallet shows, despite the fact that U.S. interest rates remain at historical lows.
Why it matters: That adds significantly to the interest costs for consumers who carry credit card debt from month to month, and the average household now pays more than $1,150 a year in credit card interest.
On the bright side: Consumers may get some respite from a Fed rate cut. Credit card rates are legally tied to the so-called prime rate that banks charge their best customers, which is based on the U.S. overnight interest rate set by the Fed.
But, but, but: The Fed funds rate has diverged a bit this year from the prime rate and the credit card rate since the Fed paused its hiking cycle.
Between the lines: NerdWallet's data also finds almost half of Americans (47%) do not pay their credit card bill in full each month and 38% of U.S. credit card holders don't know the interest rate on their cards.
Beyond Meat short sellers haven't let a little thing like nearly $1 billion in losses deter them from their bets against the fake meat company's stock.
What's happening: Prior to Tuesday's big losses, which followed the announcement that Beyond Meat would sell an additional 3.25 million shares in a secondary offering, the stock had been on quite a run.
But the short sellers have refused to quit, adding to positions in spite of extraordinary losses and the 138% borrow fee for existing shorts and 160%–240% fee for new short sales.
It could get worse: Short sellers are likely in for a squeeze, S3's managing director of predictive analytics Ihor Dusaniwsky said in a note.