Lowered Interest Rates Are Favorable For the Economy

Most Americans are affected by interest rates whether through a mortgage or credit cards. July 2019, marked the first time the Federal Reserve lowered interest rates since the crash in 2008. Pressured by President Trump and the possibility of an economic downturn, policymakers voted 8-2 for the small cut in federal rates.

“Should trade negotiations turn positive and economic data, especially inflation, firm in coming months, July’s move could be a one-and-done easing,” said nationwide senior economist Ben Ayers in a note. “Still, given the slowing trajectory for the economy and precedence from previous mid-expansion easing cycles, a further rate cut (or two) by year-end may occur.”

Investors are eager to see the out turn of the rate cut and are hoping for more rate cuts in the near future. They are watching for any clues that there will be a future rate cut. Wall Street has already been pricing another rate cut for the year end.

The economy is strong as seen in job gains and retail and economic growth on the rise. If there is another cut, the Federal Reserve will need to justify their decision.

Policymakers vocalized that they will “continue to monitor” any data which would have an effect on the US economy and “act as appropriate” to retain “the country’s longest economic expansion in history.” The central bank believes these steps are necessary to keep America’s economy strong.

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