Fed likely to lower interest rates
Understandably, the
As part of its mandate, the Fed guides our nation's monetary policy. By manipulating the cost and availability of credit, the Fed seeks to influence spending, investment, employment and inflation to promote the health of our economy. One of its main tools in this endeavor is to adjust the benchmark fed funds rate, which often serves as a basis for many types of consumer and business debt. As the fed funds rate is either raised or lowered, so typically are interest rates on credit cards, bank loans, auto loans, HELOCs and home mortgages.
Between
But now the Fed appears set to begin lowering interest rates. At its next meeting, scheduled for Wednesday, the Fed will likely enact its first reduction to the fed funds rate since
So, why is the Fed now likely to begin lowering interest rates? First, the rate of inflation has significantly declined from its
Secondly, there is growing apprehension on the state of the
As the economy continues to weaken, the Fed wants to start lowering interest rates to ease the financial burden on consumers and businesses. The less the strain on consumers and businesses, the greater the odds the Fed can help prevent or minimize any potential recession. At least, that's what the Fed is hoping for.
mark Grywacheski is an expert in financial markets and economic analysis and is an investment adviser with
Disclaimer: Opinions expressed herein are subject to change without notice. any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. Information has been obtained from sources considered reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned.
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