The Federal Reserve gambles the job market won’t crack

?? Welcome to Trendlines. Today's secret word is Jost .

I'm Boston Globe financial columnist Larry Edelman , and in this edition I explain why the Federal Reserve is taking a risk by doing nothing on interest rates.

Plus: Literally everyone on this US Olympic team went to Harvard.

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.

See you in September

The Federal Reserve on Wednesday left its benchmark lending rate in the range of 5.25 percent to 5.5 percent, right where it’s been for the past year.

?? What the Fed said

Fed chair Jerome Powell said in a post-meeting news conference that the central bank would wait until at least mid-September to cut rates, even though inflation has already cooled to the point where its 2 percent target is in plain sight.

• “It is just a question of seeing more good data,” Powell said.

??? The big picture

Waiting for more evidence of inflation’s retreat jeopardizes the Fed’s “soft landing,” the return to more normal price increases without a painful spike in unemployment.

If workers continue to jump into the job market faster than new jobs are being created, unemployment would climb and consumer confidence and spending could fall, making an economic downturn more likely.

• “Monetary policy takes time to work through the economy — up to 6 or even 12 months. The risk of waiting too long is slowing the economy down more than necessary to bring inflation down,” said Claudia Sahm , chief economist at New Century Advisors and a former Fed staffer.

?? Final thought

The Fed believes the job market is strong enough for it to hold off on cutting rates at least until its next meeting on Sept. 17-18, when it may have gained “greater confidence” that it has won the inflation fight.

But as Sahm points out, the Fed should be planning much farther down the road.

The Fed is being too cautious. Wednesday was the day to start getting interest rates back to normal.

?? Trending

International : A multicountry prisoner swap freed Evan Gershkovich, a Wall Street Journal reporter arrested in Russia in March 2023, and at least one other American held in Russia.

Politics : Mass. lawmakers approved a $5.2 billion housing bill but failed to reach agreement on an economic development package and Boston's bid to alter its commercial property tax rate.

Health Care : Steward's bankruptcy judge approved the closing of Carney and Nashoba Valley hospitals.

?? The Closer

Meet Harvard, the Olympic fencing powerhouse.?

The four members of the US men's saber team are Harvard men (three alumni and one incoming? freshman), a first. Six more Harvard athletes are on other US fencing teams and two are representing Canada.

It hasn't always been like this. As The Wall Street Journal reports :

Before the eight current Olympians, it had a total of nine Olympic fencers in its history — and only five since World War II. In that time, Harvard’s law school put more alumni on the Supreme Court.

Unfortunately, the men's saber team, which had been favored to win a medal, was upset on Wednesday by Iran.

Being from Harvard only gets you so far in international fencing.

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