Fed Cuts Main Interest Rate to Near Zero, to Boost Assets by $700 Billion
(www.foxbusiness.com)
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I still dont get why this is good or why trump wants it other than he says our rates are not competitive. I get that. I also get why the futures dropped because this looks like fed panic.
What else?
The interest rate indicates the value of money. A high rate increases the value of money and causes prices to fall. A low rate decreases the value of money and causes prices to rise.
reminder edit: Interest rates were low throughout Obama's presidency to bolster the economy after the 2008 recession. The Fed started raising rates towards the end of Obama's presidency to slow down the economy. Look up "quantitative easing".
Low interest rates are meant to encourage borrowing and spending - cars, houses, etc. to boost the economy. However, the fed can’t always drive this behavior. If people are scared, they won’t take out low interest loans. So we shall see how it plays out.
I’m bummed because I’m more of a saver and now my money will be earning even less interest.