The Fed is ready to cut rates. Is it too late to avoid a recession?

?? Welcome to Trendlines. The secret word is "Shogun. "

I'm Boston Globe Media financial columnist Larry Edelman , and today I look at whether the Federal Reserve, which tamed inflation, can now ward off a recession.

Plus: The holiday shopping season begins.

Trendlines is my twice-weekly newsletter for Boston Globe Media . Click the subscribe button to keep on top of business and the economy in the region and beyond.

It ain’t easy

The Federal Reserve is expected on Wednesday to begin rolling back the high interest rates it deployed when prices overheated during the COVID recovery.

• Central bankers will probably opt for a reduction of one-quarter of a percentage point in their benchmark rate, which they’ve held at about 5.3 percent since July 2023, the highest level in more than two decades.?

• Many investors, however, have placed bets in the futures market on a half-point change.

Either way, it will likely be the first in a series of cuts.

?? Why?

Fed officials are shifting their priority from inflation, which has cooled substantially, to the weakening job market.

• “The risk that the job market and broader economy will weaken too much is higher than the risk that inflation will reaccelerate,” said Mark Zandi, chief economist at Moody’s Analytics.

?? The economics

Lower rates help the economy by making it cheaper for consumers to borrow money to buy a home or a car, and for businesses to secure loans for expansion.

It can take up to a year or more for rate changes to work their way through the economy. But some rates have already begun to fall in anticipation of the Fed’s decision.

• The 10-year Treasury yield was 3.65 percent on Friday, down from 4.7 percent in late April. The average rate on a 30-year fixed mortgage, which is influenced by the 10-year note, declined to 6.6 percent from 7.2 percent over the same stretch.

?? The goal

Zandi said the Fed is aiming to bring rates down to the level where they neither support nor restrain economic growth, a so-called neutral rate that he pegs at about 3 percent.

• He expects central bankers to move gradually, taking the federal funds rate to 4 percent by the end of 2025.

?? Final thought

Shooting down inflation without crashing the economy is a rare feat, one that economists doubted the Fed could pull off.

But not a lot of what’s transpired over the past four-plus years has played out like the textbooks say it should.

Maybe this will be another unexpected — but pleasant — twist in the story.

?? Trending

Social Media : TikTok heads to court on Monday over a US law that could lead to a ban on the popular, Chinese-owned platform.

Environment : A Massachusetts class-action lawsuit may set a new standard for PFAS damages.

Media : CBS said Johnny Green Jr., general manager of its New York TV affiliate, will also run WBZ in Boston.

?? The Closer

Summer's still here, astrologically, but it's never too early to think about holiday shopping. At least for the folks at Deloitte, the audit and consulting firm.

Deloitte is forecasting a retail sales boost of 2.3 percent to 3.3 percent for the November-January period — "solid" but not as strong as in 2023, when sales rose 4.3 percent. E-commerce will drive the overall gain, with the firm estimating a bump of 7 percent to 9 percent in online sales this season.

Lower inflation may encourage more spending, but it also curbs the nominal rise in the dollar value of sales, according to Deloitte, while "rising credit card debt and the possibility that many consumers have exhausted their pandemic-era savings will likely weigh on sales growth."

Deloitte didn't predict when we might see the first in-store Christmas displays or television commercials.

Farewell Tito Jackson . Thanks for reading. I will be back on Thursday.