Investments: Rate Cuts Part 3
Rate cuts once again dominated market headlines last week, as the Federal Reserve under Chair Jerome Powell elected to cut rates for a third consecutive meeting. The path to this decision, however, was more complicated than in previous months.
Coming on the heels of the longest government shutdown in U.S. history and a temporary vacuum of economic data on unemployment and inflation, the Fed faced heightened uncertainty. This backdrop contributed to the most internal pushback of Powell’s eight-year tenure, with three dissenting votes on the Federal Open Market Committee, two opposing any cut and one favoring a more aggressive cut.
As we head into 2026, sentiment remains clouded regarding the direction the Fed will take. President Trump has made it clear that he, and whoever he appoints to succeed Powell in May, favor a continuation of rate cuts. However, more than half of the governors on the FOMC board said they see no more than one cut warranted in 2026 altogether.
Ultimately, the economy will determine the path forward, with extra attention given to both the direction of the labor market and the path of inflation in the months ahead.
Planning: Qualified Birth or Adoption Distribution
Having a child is a major milestone. Sometimes, parents need a little extra help as they get used to the changes that come with this milestone.
A Qualified Birth or Adoption Distribution, or QBAD, allows parents to withdraw up to $5,000 per parent from an IRA or employer retirement plan within one year of a child’s birth or adoption, subject to employer approval. This qualified distribution avoids the 10% early withdrawal penalty that normally applies to withdrawals made before age 59½.
Although the amount withdrawn is still taxed as ordinary income, a QBAD can offer helpful flexibility during a season when expenses tend to rise. Used thoughtfully, it can serve as a valuable planning tool for growing families without jeopardizing their long-term goals.
