Fed should get United States interest rate ‘down to zero, or less’

Marco Green
September 12, 2019

He did not address the risks or financial market tensions that central banks in Europe and Japan have confronted as a result of their negative-rate policy. "President Trump's call for zero or even negative (!) interest rates would not be medicine, but in fact poison, for the long-term health of the economy".

U.S. President Donald Trump on Wednesday said the Federal Reserve should lower U.S. interest rates to "zero or less" to help "refinance our debt" with lower interest costs and a longer term, and blamed the U.S. central bank's chief for missing "A once in a lifetime opportunity". The USA should always be paying the the lowest rate.

Powell has indicated the possibility of more cuts to prevent the economy from slowing down, but has stressed that the Fed does not consider political factors in deciding on monetary policy. He has repeatedly blamed the Fed and Chairman Jerome Powell, who goes by Jay, for raising interest rates too steeply in 2018 and constraining the economy as the president pursues a trade war with China.

"We have the great currency, power, and balance sheet", Mr Trump said in announcing that the "Federal Reserve should get our interest rates down to ZERO, or less". The rate now is in a range of 2 per cent to 2.25 per cent.

After raising the benchmark lending rate four times past year, to a range of 2.0-2.25 per cent, the central bank cut in July for the first time in more than a decade, partly as insurance against the impact of trade uncertainties on the economy.

If the Fed cuts rates dramatically when the economy is still sturdy, consumers and businesses likely would view the move as a sign of trouble, prompting many to pull back spending and possibly leading to the growth slowdown they fear. The policy is meant to account for extremely weak economic conditions by essentially charging banks to hold reserve deposits at the Fed.

Other reports by Click Lancashire

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