Why would the Fed lower the interest rate today?

The only valid reason I’ve seen is so we don’t deviate too far from the European rates or money will flow here and the dollar will strengthen

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That's not my question but we only have so much title character space. If the Fed lowers the borrowing rate of interest today, is this the first time a sitting President of the US made it happen, with a rebounding economy and good news all around it? Usually the opposite occurs. Just thinking of the past where interest rates were high and higher, output was stagnant, inflation was problematic... Other countries devalue their currency to spur what seems to be an upward economic growth motion for them? I like it. I believe this type of economic change of course is extremely valuable. But, with economic growth comes the inevitable growth in government (for no good reason).

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You are right, BB. Trump has pushed em' to lower Rates so that such will support a sustained growth in what should be a beginning, cyclical economic downturn. He did so in order to win the coming election.

Government IS going to grow, as High Tech affects the employment and the traditional, 'merit'-based economic model which allocates societal affluence. The People...ARE 'the Government'. To the degree that the People become desperate, they lose faith in Government to address their needs. And many who are willing and had marketable skills will end up desperate. That will change Government. We are experiencing the first reverberations of that change.

And we have two choice. We can talk, and find common moral and practical ground, and implement said Governmental Policy...or we can fight - with a lot dying off - and then talk and implement a Government which reflects the needs and desires (moral and practical) of the remaining Populous.

"The Fourth Turning" elucidates the cyclical aspect of the cultural/economic dynamic...but given today's monumental High Tech innovations...hardly envisions whether of not the next "Turning" will be as extraordinary as the transformative powers which Knowledge and High Tech will exert.

Bottom line. Ultimately...'money' won't matter. It's a means to an end. Knowledge will. And how our Human Family reacts to said Knowledge. The 'sky' is the limit. But the 'sky' is just as black...as it is blue. We'll see if Humanity makes it through the Fermi Paradox/"Great Filter"...or if we are found lacking...and filtered out.

I enjoyed your post. And true, we are the government and the governed simultaneously, and as the population grows so does the oversight system. It must, but, it also must be kept in check.

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Why would the Fed lower the interest rate today?

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1. Inflation is running below the 2% target rate.

2. Likely mostly due to other central banks (Europe and China) debasing their currency making ours stronger decreasing U.S. inflation (and high food and energy supply)...so the fed responds with a downward bias.

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BestBanker

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You tell us pal!

You forgot to post through your BestBanker alter.

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RCDfan1950

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If you're going to quote from a book, at least reference it with a link.

Just as baseline - the Fed only “cuts” the overnight rate - and likely only .25%. Cuts and increases don’t happen in a vacuum - they are part of a strategic policy implementation and occur in sets of 3-5 movements in succession, typically every 6 weeks at the OMCM.

Rates should be cut to stimulate economic activity and growth. We currently have “full employment”, good GDP, political pressure to raise the minimum wage, and inflationary pressure looming from a trade war with China (they give us cheap goods and hold a significant amount of our debt).

We don’t have the need to cut rates now, and I fear it will have the reverse effect when the cut gets to market - creating inflation and increasing rates at the consumer level. It will slow housing and trickle down to the rest of the economy.

The Fed allowed effective 0 rates to become normal and they raised them too early in the recovery and too much. They are now trying to repair the damage from their interference.