Fed to Cut Rate Again this Month

With a tumultuous market over the last few months, the Federal Reserve is due to meet next week, most likely to cut rates again.  Rates were cut recently in July down to 2%.  Many analysts believe the Fed will continue to cut rates to alleviate recession fears.  However, the amount that they will lower is still up for grabs.  The President is pushing for rates at zero or even negative rates. 

The Chair, Jerome Powell, responded the same way as the previous rate drop, that the reserve would act appropriately.  Previous rate drop, although the national economy was doing fine, was due to fears of an unstable global economy.  Since then, the market has faltered, and the trade war intensified. 

Due to all of this, President Trump is pushing for negative rates.  As previously reported, there are currently a few countries who currently have negative rates.  Unfortunately, the negative rates in Japan and Europe have failed and could do the same for the US.  Many people who are against negative rates believe this would push the US further into recession, rather than helping our trillion-dollar deficit.  Negative rates, they believe, would be putting a band-aid over our growing debt.

Our economy has slowed significantly; the trade war with China has made investors uneasy.  Although the latest jobs report shows a slight slowing last month, Schwab decided to layoff about 600 employees ahead of the rate cut.  Layoffs were due to the slowing economy and hints of a rate cut from the Fed.

The Federal Reserve is meeting next week.  Everyone is anticipating another quarter point drop, but not near zero or negative rates.