Once again the Fed cut interest rates this previous month marking the third time they have done this since July. The reason for the cut is their worries of weakness in manufacturing, trade, and business investment could threaten economic expansion. This seems to be quite a bit amount of cuts in such a short period of time, are their worries justified or do you think this will lead to a larger economic problem with all of these interest rate cuts?
https://www.wsj.com/articles/fed-officials-cut-rates-amid-worries-on-trade-global-growth-11574276730
I think if the Fed keeps cutting rates people will fear that things will worsen because... its the fed. On the other hand, if there is low interest rates business's will invest more. I guess only time will tell if this could lead to a good or bad thing.
ReplyDeleteNow, I know little as to what is happening in the housing market and other markets. However, the low interest rates concern me. Low interest rates encourage spending and investing with both businesses and consumers. However, when rates are too low, they can spur excessive growth and subsequent inflation, reducing purchasing power and undermining the sustainability of the economic expansion. With the housing market for example, it is cheaper to take out a loan in order to buy supplies to then make homes.. but that does not mean that the homes that are being made are quality.
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