Our View on the Federal Reserve
September 2025
Letter to Our Clients
It’s been about five years since I started directly writing letters like this to our clients, popping them in an envelope and licking a stamp. This little practice has served to keep our clients in the know of our investment philosophy and adjustments to our portfolio strategy. It has also helped keep one of our favorite governmental agencies afloat; the US Post Office. Today, I am writing to explain our view on theFederal Reserve.
Over the past several months, it has become clear that the current administration is exerting public pressure on the Federal Reserve to lower interest rates. While it is not unusual for political leaders to voice their preferences, it is important to remember that monetary policy is not designed to serve an election cycle. It is designed to serve the long-term health of the economy.
The Benefits of Lower Rates
Lower interest rates can, of course, bring real benefits. They reduce borrowing costs for both businesses and households, which can encourage investment and spending. For entrepreneurs, this may mean access to cheaper capital for growth. For families, it can mean more affordable mortgages or the ability to refinance debt. In the stock market, lower rates often create upward momentum as investors shift out of bonds and into equities, boosting valuations.
The Dangers of Cutting Too Soon
But lowering rates at the wrong time carries risks. If rates are cut when the economy is not in genuine need of stimulus, it can create bubbles in financial markets, distort valuations, and encourage unsustainable borrowing. In such an environment, asset prices may appear strong, but the underlying foundation is fragile. When conditions shift—or when inflation reemerges—markets can suffer sudden and painful corrections.
A Brief History
Since its modern independence was solidified in the 1980s, the Federal Reserve has been guided not by politics but by its dual mandate: maintaining price stability and promoting maximum employment. At times, this has meant raising rates aggressively, as in the fight against inflation in the early 1980s. At other times, it has meant cutting rates deeply, such as during the financial crisis of 2008 or the pandemic of 2020. History shows that when the Fed acts based on data rather than political influence, the economy is more resilient over the long term.
Reading the Current Data
Recent trends point to lower rates ahead, regardless of political pressure:
- Job growth is slowing.
- Wage increases are moderating.
- Consumer spending is declining.
- Inflationary pressures are cooling.
We believe rates will be lower in large part because of this emerging data. This is precisely what it looks like when the Federal Reserve makes data-driven decisions.
At Conscious Wealth, we are preparing for that environment and are adjusting our portfolios accordingly to capture opportunities. Because in the end, wealth is not built on political cycles—it is built on strong foundations, thoughtful stewardship, and decisions that prioritize the future over the moment.
With gratitude,
Brandon Hatton
President, Chief Investment Officer
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Letter to Our Clients
It’s been about five years since I started directly writing letters like this to our clients, popping them in an envelope and licking a stamp. This little practice has served to keep our clients in the know of our investment philosophy and adjustments to our portfolio strategy. It has also helped keep one of our favorite governmental agencies afloat; the US Post Office. Today, I am writing to explain our view on theFederal Reserve.
Over the past several months, it has become clear that the current administration is exerting public pressure on the Federal Reserve to lower interest rates. While it is not unusual for political leaders to voice their preferences, it is important to remember that monetary policy is not designed to serve an election cycle. It is designed to serve the long-term health of the economy.
The Benefits of Lower Rates
Lower interest rates can, of course, bring real benefits. They reduce borrowing costs for both businesses and households, which can encourage investment and spending. For entrepreneurs, this may mean access to cheaper capital for growth. For families, it can mean more affordable mortgages or the ability to refinance debt. In the stock market, lower rates often create upward momentum as investors shift out of bonds and into equities, boosting valuations.
The Dangers of Cutting Too Soon
But lowering rates at the wrong time carries risks. If rates are cut when the economy is not in genuine need of stimulus, it can create bubbles in financial markets, distort valuations, and encourage unsustainable borrowing. In such an environment, asset prices may appear strong, but the underlying foundation is fragile. When conditions shift—or when inflation reemerges—markets can suffer sudden and painful corrections.
A Brief History
Since its modern independence was solidified in the 1980s, the Federal Reserve has been guided not by politics but by its dual mandate: maintaining price stability and promoting maximum employment. At times, this has meant raising rates aggressively, as in the fight against inflation in the early 1980s. At other times, it has meant cutting rates deeply, such as during the financial crisis of 2008 or the pandemic of 2020. History shows that when the Fed acts based on data rather than political influence, the economy is more resilient over the long term.
Reading the Current Data
Recent trends point to lower rates ahead, regardless of political pressure:
- Job growth is slowing.
- Wage increases are moderating.
- Consumer spending is declining.
- Inflationary pressures are cooling.
We believe rates will be lower in large part because of this emerging data. This is precisely what it looks like when the Federal Reserve makes data-driven decisions.
At Conscious Wealth, we are preparing for that environment and are adjusting our portfolios accordingly to capture opportunities. Because in the end, wealth is not built on political cycles—it is built on strong foundations, thoughtful stewardship, and decisions that prioritize the future over the moment.
With gratitude,
Brandon Hatton
President, Chief Investment Officer
