Another week begins, and with that we have yet more news regarding the Federal Reserve and whether or not we can expect to see a rate cut. Experts are now saying that the interest rate cut is more likely than ever and, should it happen, it will be the Federal Reserve’s first rate cut since 2008. You may recall that the US was deeply mired in a recession at the time with the central bank working feverishly to maintain historic economic expansion before it sizzled to a halt.
While the expected cut will be small, the newly expected shift in policy will bring about an end to gradual rate increases that have long been intended to return the US economy to a more “normal” state coming out of the Great Recession. That was a time when the Fed dramatically slashed rates to nearly zero percent in a dramatic rescue attempt to save the US economy. That approach worked, for the most part, as it did drive unemployment to a 50-year low as wages slowly improved.
Now, with all of that good news—or, at least, what sounds like good news—a rate cut at this time would certainly send a signal that the current economy is not going to improve beyond where it is today.
Of course, US President Trump has been criticizing the Fed for a year since the rate increase of 2018, claiming that the economy would have soared if they had done the opposite. Indeed, he claims that the Fed refuses to obey his orders—despite the fact that the Fed operates independent of the White House, and for good reason. The Fed needs to make decisions based on precaution and not politics as its entire purpose is supposed to be protecting consumers—and the economy as a whole—from the harmful effects of drastically changing economic global conditions; and, of course, Trump’s incessant trade war.