Time for the Fed to Cut Interest Rates

The Federal Reserve should demonstrate its independence by cutting interest rates — because the economy needs the help.

Comments: 162

  1. Sadly this paper, the voice of Wall Street, is advocating in favor of the very wealthy, for the Federal Reserve to lower rates, to juice the stock market, to insure Trumps re-election. The stock market rise is due to the FED using our tax dollars to prop up Wall Street. Any time there is news of a rate hike the ,market dramatically sells off. This sounds more like the old socialism for the wealthiest and capitalism for the rest. Remember that 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households

  2. @steve I was so relieved when the interest rates went up so I could move some of my retirement savings into CDs — as little as it was. Stocks used to be for investing in companies. Where’s the investment in our country? I’m not confident that the high stock market means a good economy. It would be better to hand over the zero interest rates to the rest of us. I know people who are desperate to pay down their credit cards.

  3. @Oliver Interesting point of view. However, zero as a fed funds rate won't necessarily translate into reduced interest rates for folks with current debt (consumer, college, home, credit card or otherwise).

  4. @steve I recall reading that one reason the stock market is doing so well is that significant demand and stock price increase is caused by corporations buying back their own stock. They are facilitated in doing this when interest rates are low and they can use borrowed money for the repurchase.

  5. Exactly why should the Fed cut interest rates? The lowest unemployment rate in decades, the highest stock market ever, a 3.1% GDP growth rate (1st quarter), easing tensions related to the US China trade war, a robust June employment growth rate, a higher-than-two percent ACTUAL inflation rate (notwithstanding Fed's calculations), and an already super-low interest rate. What's the rate cut going to do, other than further push the market into irrational exuberance territory?

  6. @Zara1234 Great points; right on the money. Remember just a few months ago Powell proclaimed the FED was "data dependent"? Then Trump threatened to fire him and demanded lower interest rates to support his re-election campaign. Bye bye data dependent and suddenly only 2 employment positions seem to matter - POTUS and FED chair.

  7. @James Agree. Whether it's to save their jobs or to otherwise obey the powers that be, the FOMC members appear to be out-doing each other in dovishness. In his testimony today, Powell did not acknowledge that the domestic and global situation had improved over the last month. It looks like they have decided to cut rates, and are now trying to justify that decision.

  8. @Zara1234 The stock market is not the economy. Half of Americans own no stocks at all. They should raise the rates and loosen the regulations for qualifying for a loan.

  9. Do the right thing? The Fed? And that "right thing" is what? How about implementing monetary policy that doesn't push the stock market higher but raises wages? What would that "right thing" monetary policy be?

  10. I don't believe there is any justification for helping re-elect Trump in 2020. Any "vindication" would be a Pyrrhic victory for the FED and a calamitous defeat for our democracy.

  11. Lower interest rate will neither lower the unemployment rate nor will it increase wages. What it will do is empty the basket of available tools that will be required when the economy retracts. If trump is still president when the next retraction begins, I fear the self-proclaimed king of debt will push for defaulting on our bond obligations thus crashing the dollar as a global fiat and destroying

  12. wealth among the other than 0.1%.

  13. Whether or not the Fed should cut interest rates now, it certainly would NOT be demonstrating its independence by doing so, since Trump has been incessantly demanding it from them. I don't know why you would state this? Trump has made the appearance of independence difficult for the Fed, and I don't know how it can demonstrate its independence under the circumstances.

  14. "too much prosperity — would spark dangerous inflation." No doubt jobs aplenty here in Atlanta, and around the country as the labor statistics indicate. Inflation is not a word in my daily vocabulary, I don't walk around and say wow, that price sure inflated. What I say is, yikes, $9.99 for a pound of beef! I can't walk out of a grocery store without plunking down $30 or $40 through the 10 items or less lane. Maybe inflation is low "up there", but not down here where I live.

  15. Clearly this economic expansion has not arrived for most working people.

  16. No, as time will prove we actually need to raise interest rates so we can reduce them during the inevitable coming recession. Why don't people know this?

  17. You are correct, but that custom seems to be ignored now. Don't know when that happened.

  18. Because most of us can’t seem to remember 2009. There is a bubble among us, we just can’t see it. Yet.

  19. @Tullymd Because most people ignore monetary policy in favor of the far more entertaining political rhetoric they see on the news and uninformed blogspam sites like the NYT has been reduced to. It's basic accounting arithmetic for anyone who understands how the price of money affects different asset classes. But as long as voters associate market/economic performance with whoever's sitting in office (without regard for the preceding years of monetary policy that got things to that point), monetary policy will forever be a bridge too far for the typical voter.

  20. 10 year treasury rates and mortgage rates and other actionable rates for Americans are already at a very low level compared to historical trends. Fed's overnight lending rate is still low and has not gone back to the pre-housing crisis levels. So if they lower the rates now in such a strong economy what leverage will they have if an economic crisis hits whether due to global slowdown or any other unanticipated event including the built up consumer debt. Fed should indicate that they will be very patient and not continue the rate hikes. That should keep the markets calm. Greenspan's focus on markets is what led to the housing crisis in the first place along with .com bubble. Let us not repeat the same mistakes.

  21. I guess Trump has not been shopping lately in a supermarket. Food prices appear to have exceeded the 2% Fed desired inflation rate by a significant degree.

  22. @Henry Fellow That's the tariffs, or the fear of them.

  23. Job growth and wage growth is a function of investment in real things and sharing the profits with those who make them possible. Lowering the interest rates punishes savers and provides no incentives for those with access to easy money to actually do something useful with the borrowed money. The investment class and the bankers will sock away more profits, leaving the economy cash starved as prices keep rising, wages do not keep pace, personal debt keeps rising and health care looks like it will soon become the sport of kings.

  24. Nope. Not buying it. Yes, the Fed was too passive in the immediate post-crisis period (plus politically-motivated sequestration prevented fiscal policy from helping). But bygones are bygones, and it can’t make up for past mistakes by being too accommodative now. The economy is back (finally!) to full employment and the Cleveland Fed’s median inflation measure shows inflationary pressures are present. Inflation expectations are being anchored by a 2% target that is viewed as a ceiling; not a mid-point to a range. The financial cycle is at its peak and no sensible Fed governor wants to be remembered as having facilitatied the next bubble/crash. Oh, and by the way, in case you haven’t noticed, the Fed’s independence is under attack. If Powell allows himself to manaouvered into providing “insurance” against the possibility that Trump’s bad policies will increase the odds of a recession, he is the next Auther Burns. Paul Vocker was not minimizing some model-driven loss function.

  25. Government unemployment and GDP 'growth' numbers are pure fiction. Growth is simulated by piling on more debt.

  26. Why does it matter if the fed chair and president have the same opinion currently? That doesn’t mean the president is controlling the chairman... Not many signs of a recession so I don’t know why folks here are panicking about it. I know there were many screaming recession when the yield curve inverted, not the case anymore and it doesn’t always equal recession.

  27. I think the question is why they agree. Arm twisting by Trump fully politicized the Fed and they capitulated.

  28. the reason you don't see wage growth is that in the last 45 years the giant money powerhouses have shrunk the power of the working person systematically and steadily to nearly nothing. Back when America was great, labor was powerful.

  29. Cut interest rates when the stock market is at a record high, the top 1% needs a boost. For the rest of us the effect will be minimal. Union membership has been falling for years leaving more and more workers without any strategic bargaining power against companies. The "Gig Economy" has returned from the ashes of the 18th century and leaves workers as mere contractors. Consumers can shop the world for the best price on many products, a further dent in worker bargaining power. It is becoming increasingly apparent that the old economic models are stale, but then it seems that if one is an economist today, every problem can be solved by either more or less liquidity.

  30. So the Fed cuts rates and what happens next? Trump intensifies the trade wars and the economy slows. Then what?

  31. This is the wrong conversation. Instead, we should be talking about how we measure inflation and employment and the underlying economic theory. Why aren’t wages growing if employment is so low? If there is more money being made because of lower employment, where is it going? What are the alternate measures and how do they compare vs. the standard orthodoxy? If we are measuring using a false yardstick then how can understand what actions to take?

  32. Wow. I couldn't disagree more. despite not being perfect, the economy is presently good enough that the FED can be raising rates to have ammunition to use during the next downturn. Next, and more important, for average working-class people who are trying to save for the future, higher interest rates are very welcomed. We would much rather put our savings into a compounding interest account at reasonable interest rates, say between 4 and 7%, where our principal is absolutely protected and not exposed to the whims of the money manipulators on Wall Street.

  33. Give me a break. Low unemployment, strong job growth and record stock prices along with low credit spreads. If the economy needs a rate cut now, I would hate see what it would need if things were reversed.

  34. With all due respect, if you think a rate cut of 0.25% is going to move the economic needle then you haven’t been paying attention for the past decade. All this will do is continue to inflate the stock market (spurring the next crises), make it easier to continue taking out loans to issue dividends and share buybacks, and fuel another round of mergers whose end result is to layoff “redundant” workers. All of these things simply continue to promote a widening income inequality gap between the 1% and everyone else, not help every day Americans. Instead, what we have learned these past 10 years is that the old interest rate school of thought is no longer applicable. You want to know why every day workers continue to see stagnant wage growth after a decade of less than 2% interest rates? It’s because Wall Street and corporations have gamed the system. They know the fed will bail them out at the first sneeze. They know that that they don’t need to invest in job creating projects because if wages stay flat the fed will just take this data and lower rates again, thereby inflating their share prices and allowing the misdirected borrowing binge to continue.

  35. @Terry Garner Peterson, Excellent comment, you nailed it.

  36. The Fed should cut interest rates? Oh yes, then corporate America can get even cheaper money and buy back more of their own stocks, further depress wages while sitting on ever-growing mountains of profits, and stifle competition. Oh, and make resident Trump look good in the process. If I want opinions like this, I'll just watch Fox 'News.'

  37. @R Mandl The New York Times must be looking for some loans... and hence they want what all corporations want.... more federal socialism to subsidize their corporate needs.

  38. Rate cuts punish frugality and savers, like me.

  39. @Droid05680 I agree. It rewards gamblers and debtors.

  40. The Fed dropped the rate by 5 percent to battle the Great Recession. Currently the Fed has a mere 2.5 percent in its toolbox. Use it wisely and do not uselessly throw it away on the drunks of Wall Street.

  41. The Fed is caving to Trump's pressure. Trump, of course, wants the stock market to skyrocket as we approach an election year. From the NY Times article of July 9: "The chances that the United States will enter a recession by next year have grown as manufacturing weakens and trade uncertainty drags on." If the Fed cuts interest rates now it will limit its own toolbox of remedies when we (inevitably) do hit a recession.

  42. I would like to ask the Editorial Board what it thinks the role of Congress should be in maintaining a healthy economy. Fiscal policy isn't even mentioned here. Infrastructure spending was promised by Trump but not surprisingly has fallen by the wayside. In favor of tax cuts for the already well to do. Congress needs to participate if we want to have a good economy. I don't see that happening right now. Monetary policy alone will not put people to work.

  43. Our economy no longer works for the bottom 80%. That is because of a structural problem, reflected in the rising inequality that the abnormally low interest rates engineered by the Fed since the 2008 crisis only exacerbated. Lowering interest rates at this point would be like trickle down economics--great for the stock market and the rich, and few more low paying jobs for everyone else. And one less tool for the Fed when the bubble bursts.

  44. The Fed should cut rates when Paul Krugman tells them it's a good idea. Not before then. Why? Take a look at his track record 2008-2018 in predicting what the economy needs and doesn't need. Full stop.

  45. After the financial crisis of 2008, in the last months of the Bush administration, the Federal Reserve kept interest rates fairly low to revive the housing market and alleviate the crisis of credit. During the Obama Administration, unemployment dropped from 10% to 4.7%, the stock market rose steadily from 6,500 levels to 17,000 and millions of pensions were saved from disaster. If you read Krugman on a continual basis, you would understand that he himself has raised doubts about a too rapid rise in current rates. I think he has some knowledge and understanding of the ideas of economist John M. Keynes. I hope you do as well.

  46. The argument of the article is flawed because the conclusion -the central bank should lower the interest rates- does not follow from the premises. Here's the argument: i. this is now the longest period of uninterrupted growth in American history ii. despite the unprecedented historical growth, millions of Americans are unemployed or underpaid iii. when economy grows, it leads to job growth, wage growth or prosperity iv. one way to fuel growth is to keep interest rates low v. Therefore, the central bank should lower the interest rates. The problem is premise (iii). You should get a sense of the problem in (ii) and ask how is it that despite this amazing growth "we don't really see wages responding" (Powell). The answer is that at this stage of late-capitalism, economic growth could lead to more wealth and low unemployment, but that doesn't mean wage growth. Corporations turn in record profits (prosperity!) and the economy creates many low-paid jobs (unemployment decreasing). As the last decade provides ample empirical evidence there is almost no correlation between cutting the rates and increasing wage growth. So, it the suggestion of the editorial board is unfounded. It is important to study philosophy which teaches critical argumentative analysis and how to construct sound arguments. If you want to create real prosperity (collective enjoyment of wealth) and see wage growth, cutting the rate is not your cure.

  47. @Mike What would spur wage growth?

  48. Cutting rates would severely limit the Fed's options when the next recession hits (and you can be sure that it will come, sooner rather than later).

  49. No rate cuts until the end of the year. The reasons Fed gave while increasing the rates still prevails. If the tariffs are dropped, the economy will get hot. It is not wise to guess what Trump does. Just sit quite and talk soft.

  50. The Fed should not be bailing out the Administration's faulty trade policies. That puts the Fed on a slippery slope while giving Trump license to levy tariffs at will. The Fed doesn't have enough leverage in interest rates or other tools to prevent damage. Trump needs to learn that his reckless actions have consequences.

  51. 4 more years of Trump is a much greater threat to the nation and the world than a modest economic downturn. Trump only has a chance of winning because the Obama recovery continued apace and cause he juiced the economy with trillions of dollars of deficit spending. Want to see wage growth? Invest in education, child care, communities, and decarbonization of the planet. This is existential.

  52. Negative interest rates simply means confiscating money from the savers and giving it to the profligate. I am tired of so much winning!

  53. This was written by people who I suspect are holding stock options, and therefore will benefit from higher equity prices resulting from an interest rate cut. Conflict of interest.

  54. Boo. I’m happy to finally get decent interest on my savings.

  55. I thought the authors were being sarcastic in the title and the first couple of paragraphs. If you cannot raise rates or reduce the balance sheet in good times, then when can you every justify it ? This is just going to inflate housing and stock market, further deepening the wealth disparity.

  56. @Mehul Shah The latest chapter in "How to beggar the poor and middle-class" Worked great last time, so why not go all out ...

  57. Wow, going even cheaper for the .01%. And what will the Fed do in a new crisis?

  58. Prosperity is not the Fed pouring more money onto the rich. That's called oligarchy.

  59. The cut now would be to make the market go up more. Congress is not stepping up to do their job. The house has passed many bills to help but the McConnell led senate has killed all of them. They have not allowed even one to the floor. We need the government to do its job but the trump/mcconnell led republicans will not do that.

  60. rate cuts--just what us old folks need. The millions of us that saved for reetirement has our nest eggs wiped out when Wall St burned up the world's economy. The interest at the time was 6% and provided me with a half years rent. That all went up in flames and not only did I lose my "income" but soon enough I used up most of my nest egg. Even with the 2.25 rate now, my bank is still paying lest than 1/2 penny on the dollar. the last thing we need is less than what we get now. BTW, we ARE the economy.

  61. Your argument for the Fed to cut interest rates is that inflation is too low. Why would that be? Consumer confidence is high, credit card debt is super high. Corporations have used their tax cuts and low interest rates to buy back stock and pay dividends, not to expand their businesses or to invest in research. The reason inflation seems low is that it is being improperly measured. Prices are continually rising, and not just from tariffs, but somehow inflation is low. Just as Trump should stay out of the Fed's business, so should editors without real expertise.

  62. @Elwood: Credit card debt for the nation is high but average debt for 2019 is lower than for the previous five years (measured in April). The average credit card debt of people with credit card debt is higher but the number of people carrying credit card debt is declining. Also, not all prices are continually rising--recently energy and apparel costs have been down. Even continually rising prices would not necessarily mean high inflation, since prices may rise slowly, as they have for many items in recent years. Finally, the Bureau of Labor Statistics calculates several different measures of inflation. Each of these is well defined. When you say that inflation is being improperly measured, what are you talking about?

  63. @Elwood Mainstream media, and the Times a major member of that group, has a mandate they must always adhere to, a mandate that has nothing at all to do with educating the masses, and everything to do with managing perception. An educated populace is anathema to the survival of any (our) corporate owned government.

  64. Cutting rates now will do zilch, zero, nada, nothing whatsoever, for the poor and the barely existing middle-class, except create a few more subsistence wage jobs, just to keep the illusion alive. As for the .01%ters, the .1%ters, and 1%ters, any rate cut, even a discussion about a rate cut, will juice markets as occurred today, and add exponentially to the obscene growth in their wealth which began with the carefully planned and orchestrated recovery, which itself was designed to further beggar the poor and the middle-class. Pure unbridled avarice is alive and salivating in our soulless corporate owned government, at the prospect of another opportunity to grab what little is left in the nearly empty pockets of the masses, so yes, have at it again, no one has the wherewithal to stop our gone wild corporate owned government. Serfdom is back, brought back by our modern-day Feudal Lords, the corporations we are beholden to.

  65. If maintaining the economy requires a cut in interest rates, along with continued, record deficit spending, it is time to admit we are slipping into a recession. This cheerleading for the "Trump economy" is starting to look really silly and, worse, counterproductive.

  66. The "official" rate of unemployment is 3.7%; due to the way statistics are massaged to produce an undercount, no one actually knows whether it is twice, or perhaps three times that. "Reflecting a surge in marginally attached workers (including headline discouraged workers), broader June 2019 U.6 Unemployment jumped to 7.23%, from 7.09% in May and against 7.26% in April. On top of U.6, the ShadowStats Alternate Unemployment Estimate, including long-term displaced/discouraged workers not counted by the BLS, notched higher to 21.2%, versus 21.1% in May, having held previously at 21.2% for three months into April. An updated graph of the unemployment measures has been posted on the Alternate Data Tab (or click on the mini-graph below), with hard numbers also available there for subscribers." http://www.shadowstats.com

  67. It is apparent that Trump is gaming the Fed. Kicking the tariff ball around was specifically aimed to heighten uncertainty, which the Fed has acknowledged. Trump has been clamoring for the Fed to cut rates. Come next year, Trump will suddenly announce a fake tariff "deal" in which he really won nothing. And the Fed would have engaged in rate cuts that the economy clearly does not need at present.

  68. @Sandy Now gaming the NYTimes too.

  69. You have got to be kidding me. We need help? Go ahead take the interest rates to zero again. This boat is going to sink to the bottom of the sea. Buy gold and may heaven help us. Being first in war and last in education have nothing to do with interest rates. It's called leadership and policy.

  70. In the last two days I've received five offers of 0% financing from banks and credit card companies. Asset prices (stocks, bonds, real estate) are at or near all-time highs. When times are good, the fiscal and monetary levers must be pushed to squeeze out a little more joy for a little more time. So sayeth the editors... In reality, there's a bubble in the making. And we know how that ends. Reminds me of a song: "I'm forever blowing bubbles, Pretty bubbles in the air, They fly so high, nearly reach the sky, Then like my dreams they fade and die."

  71. Awww, c'mon, guys. Are you seriously suggesting that cheaper credit is going to spur a real economy? It will make borrowing cheaper for consumers who are about tapped out ... they are carrying as much debt as they can. But, hey, they will be able to "spend" an extra 50K they don't have on a McMansion, and that's just great! An analogous story can be written for the stock market. It's funny how the market only goes up when we hear that credit costs might go down. And then the market pulls back when reality sets in. Hmmm .... oh! there's all the great news about earnings! Back in the day, we would take look at "earnings quality." So GM is doing great ... it only had to close 2 or 3 plants this quarter to keep earnings juiced. When did I hear this before? Oh, yeah, 2006, 2007. And how did that work out? Lower rates at this point will just create an asset bubble. And the higher we climb, the harder we will fall. And the Fed will have zero arrows in its quiver to fight that battle.

  72. Which asset? I missed the Tulips and the South Sea Islands. I was too late to the Dot.Com and didn’t have any money for real estate.

  73. Wow. The only reason rates are being lowered is to help Dummy Trump. That seems unwise. As Others have said, do you unemployment rate is at record lows in the economy supposedly is booming. We’ve been living through the period of low interest rates since the 2008 financial crisis. The only only ones making money hand over fist is tech, Wall Street and powerful corporations. With a 2 trillion dollar tax cut to help the rich, the Fed seems confused on who matters most.

  74. I am stunned by this opinion. Cut interest rates? Why exactly? Unemployment is low, stock market is at an all time high; there are zero indications that a rate cut is necessary. Cutting i rates will only tie the Fed’s hands when the recession that is looming hits. And then the majority of Americans will suffer.

  75. Recession will come sooner or later;it’s inevitable. Let it come and take its course so we can have a realistic economy, not one propped up by fake monetary policy.

  76. I would agree with this opinion if we weren't in a ten year expansion. No one thinks we are in the middle of one. We are coming to an end logically, financially and statistically. We are in a bubble that, when it pops, we will need all our tools to defend against the worst. A quarter point won't do anything about stimulating anything but the stock market. All the signs point to a slow down, one that is warranted and will leave the economy stronger. Better to keep the interest rate arrow in it's quiver. I have a feeling we're gonna need it.

  77. Exactly how far is this paper willing to go to recommending financial policies that will primarily benefit the ultra-weathy in this country? Companies did not rush to raise wages with the giant Trump tax cut. They did increase dividends and stock buybacks. Did student loan interest go down with the big tax cut? Did the cost of medical care decrease? The actions proposed by the editorial board will only increase wealth inequity in this country.

  78. @EdnaTN They are apparently happy to throw their readership under the bus. They are apparently happy to have lots of their subscribers more and more out on a limb explaining to others why we still subscribe. They are apparently either highly "compromised" by "trump" at this point or just so desperate not to be "the failing NYTimes" and don't know what to do. Or both. Or they are just rich and don't get it anything other than being rich.

  79. How does the economy need the help? At this point in a normal business cycle we should have had higher rates to store some gunpowder for the next recession. Here we are, now. Due for one, and with Republicans practically begging for one with their senior leadership's craven schilling for the one percent - this most recent expansion has barely benefited anyone else.

  80. @Cristobal Absolutely correct. Can't say the NYT Editorial Board got a very good grade in Economics 101 here. The business cycle always turns sour at some point, it just takes some unpredictable event. Lowering rates now leaves the Fed with fewer arrows in its quiver when tougher times inevitably arise. Plus it just seems like they are bowing to Trump's bullying which diminishes their credibility in the long term.

  81. Three aspects of this issue that don't seem to be getting due consideration in the comments. First, a majority of Americans (or American households) own stocks, either directly or indirectly. Thus, while any increase in the stock market averages will benefit the wealthy to a greater extent, most Americans will receive some benefit from a market increase, and this may be especially important to them when interest rates are so low. (It's not even clear that the markets will rise much if the Fed lowers rates, as the reduction in rates has been anticipated for some weeks now.) Second, and more importantly, in my view, a reduction in interest rates will have effects far beyond the stock market. In particular, it may help to keep the economy going, creating still more jobs and putting upward pressure on wages. That is likely to be the biggest benefit for many Americans, and one that is long overdue. Third, those who are concerned about bubbles, or who think the current economic expansion should be left to die a natural death, have said very little about what they think should happen instead, what the consequences of the alternative would be, and why we should welcome those consequences. There are risks and consequences, whatever we do. We should be careful what we wish for, whatever that may be. However we're doing now, we can always be doing worse.

  82. @Stan Sutton "Third, those who are concerned about bubbles, or who think the current economic expansion should be left to die a natural death, have said very little about what they think should happen instead, what the consequences of the alternative would be, and why we should welcome those consequences." Simple answer. Stop delaying the consequence of what will be the popping of the bubble now instead of continuing to blowing up to a point where it destroys everything. Or, are we already there? What will happen is deflation, deleveraging, and vastly lower stock prices that actually reflex the underlying economy. You can't fix something when your credit drunk and living in a money printing dystopian world. The central bank has gotten up into this mess now it up to them to get us out if that's even possible. Do you really want to become Japan who's central bank owns 80% of the largest corporations stocks via ETF's and destroyed their own bond market? Or, maybe we can become Euproe who on their way to destroy their bond market and even after trillions of money printing can get up off the floor. We are approaching 15 trillion dollars in bonds posting negative interest rates and some of hos bonds are rated junk. Sound normal to you?

  83. This is absurd. Interest rates are low already and a reduction will not cure the underlying and fundamental weaknesses of our economy.

  84. I thought the Fed's current interest level was still quite low in regards to long term levels. I thought we needed to keep raising it to get it to a more historic norm. Reducing it now seems like a somewhat extreme step.

  85. Demonstrate independence by doing what Trump and the insatiable players on Wall Street tell it to? That makes no sense.

  86. Cutting rates will accomplish little. What it will do is encourage businesses to increase their debt. The real problem is that income inequality has reduced the velocity of money to near zero. The tax cut infused billions of dollars into the economy but very little of that money found its way into capital investment. No one has the money to buy goods or services. The quickest way to increase next quarter's profits and make CEO's stock options worth more is to buy back stock and spend more on non-productive mergers and acquisitions. Multinational corporations are just swimming in cash. Lowering interest rates will just give them more cash for dividends and CEO pay increases. The downside is that consumer, corporate and government debt is rising. I don't know when the next crash will come, but it will be a douzy . Things will be worse than they were in 2008 and the sad part is that the Fed won't have any weapons to counter it.

  87. Absolutely right

  88. Lowering interest rates now could have a short term benefit, just not for anyone living paycheck to paycheck. Cheaper credit has its risks as well as its benefits. Reports of minority gains may be greatly overstated. Don't fall for the rosy statistics. l don't appreciate the president's lack of respect for the Fed's independence, and I'm not sure media pressure is necessarily positive either. Allow the Fed to interpret their mounds of data and argue unimpeded by public pressures. Although inflation isn't a problem right now, the impact of off-the-cuff tariffs and poorly reasoned trade policy is likely to have an inflationary impact when we least expect it. The Fed needs to send the message that they are steady at the tiller, are acting on principles and reason; and that in the absence of sensible executive and legislative policy, we need stability and predictability. How about we urge the Fed to remain data dependent?

  89. @JayGee For years the Fed has been concerned about inflation only when it starts giving average Joes a chance for a raise. If the job market is tight, pay should rise. So it isn't that tight. The previous rate hike was a mistake, let's take it down a bit until there's visible upward pay movement. The Clinton boom proved that there's still a lot of slack in the job market---note the peak employment/population ratio then and now. Yes, boomers retire. But a lot were forced into retirement by the 2008 meltdown and might like to earn more spending money. Let them.

  90. From afar it feels like America, with her bullying posture and her precipitous withdrawal from so many mutually beneficial international accords, is already responsible for undermining the economic stability or her former friends. While understandably desirable from a purely parochial perspective, an even more robust US economy under the ongoing control of Trump&Co can only come at even greater cost to her former friends and allies and further erode any logical basis for the cause of international peace and global security.

  91. The Fed, a private institution, may or may not "cut" rates (which rate does the public--evidently the intended audience of this Opinion--think the Fed is cutting?) but it has little to do with the civilian economy, and rather the government economy. That economy is in debt--$21 Trillion and counting. Lower rates subsidize it, but worse, encourage it. In the civilian economy, it has profound allocation effects. The Feds will likely decrease the discount rate, but largely to serve near-term federal war planning expenditures (Iran) that are forecast to reach 3-4 times the Iraq war, which cost $1.7 Trillion, and $450 Billion in post-war veteran benefits. An Iran war, increasingly probably, will require no less than $7 Trillion, which btw is the current debt already incurred from the so-called Global War on Terror. War on a credit card--and you get the bill.

  92. On the surface, this seems to be a feeble argument. No one is a fan of recessions, but such temporary shocks to the economy seem to be the only practical way to shake out investment excesses, bubbles if you like the term, and to redirect those funds into other, more productive, investments. Consider the beneficiaries of an interest rate cut. When I begin to name them in descending order, I have a difficult time placing the working middle class into the top ten. Stock investments will roar on, giving us a little taste of the prosperity. Companies may or may not invest; those investments depend on a lot more than low borrowing rates. Sooner or later the hammer must fall. If later, it will make a lot more noise.

  93. The dramatic drop in stocks at the end of last year and early this year was not precipitated by two 0.25% rate hikes from the Fed. Telegraphed in advanced those were priced into the markets. It was President Trump's tariffs on China, along with trade attacks on Canada, Mexico and Great Britain to name a few, that caused the economy to falter. Yes, the economy needs help: it needs our President to show restraint. Chairman Powell and the Fed cannot supply that. Additional rate cuts will only embolden him to continue to bully the Fed. "If you give a mouse a cookie then he'll want a glass of milk".

  94. A disastrous and irresponsible reqest by the editorial writers. Cheap money is what has gotten us into a debt explosion that only massive debasement of the currency will solve. Creating inflation isn't the central bank's mandate nor is it to support stock prices but that exactly what they are doing. Calling on even more cheap money is like giving into a heroin addict addiction. This is already the longest expansion in history and recessions are normal. It's not capitalism to continue to "fake it until you make it" with zero bound rates and money printing (Quantitative easing) indefinitely. Cheap money concentrates in ever larger corporations and individuals and exacerbates income inequality and destroys innovation and small business. It time to get of the magic bus of activist central bank money printing and taxing wage earners via an inflation tax so Wall St stock and bond prices can continue blowing its bubbles.

  95. With such extreme levels of debt at the corporate, government and personal level (due to ridiculously low rates for more than a decade) the transmission mechanism of rate cuts to economic activity (productive borrowing and investment) has been non-functional for years. Rate cuts now only will result in stock buy backs by the C Suite and elevated equity prices (already an obvious bubble). Rate cuts will do nothing for employment or wages. We need higher rates to help pension funds, savers and retirees. The editorial is simply promoting higher stock prices for the wealthy and greater wealth inequality. Low inflation is great if you are a moderate of low wage earner.

  96. What never ceases to amaze me is how the same people who make a recommendation as in this article, that a current interest rate cut is needed, will always proudly label themselves as fiscal conservatives.

  97. Who needs the Fed when the Times editorial board has all the answers? A permanent recovery is not the goal of monetary policy. Periodic contractions serve a purpose. Our economy has been artificially pumped up by low interest rates since the melt down in 2008. While drastic measures were necessary to deal with the crisis, their continuation during this record recovery will lead to all sorts of distortions that will ultimately cause great pain at some point. These low rates are like crack for investors. If the Fed can’t normalize rates when the economy is strong, then when can it?

  98. @RockP ...and let's not forget that the Fed was essentially "asleep" at the switch from 2005-2008 as the subprime debacle was reaching its endgame. The Fed abdicated its oversight and regulatory role and was an enabler of some of the most destructive financial shenanigans in American history. So much of the economic destruction could have been avoided had the Fed and other regulators done their required jobs. Yet, the Fed perhaps learned a "sordid' lesson from that debacle. That is, rising interest rates expose all the rot that was hidden from public view. And now, 11 years later, Wall St.'s current rot was similarly hidden, that is until rates really began to rise by Dec. 2018 from still historically low levels. Wall St. sold off in its worst Dec.since the 1930s. Wall St. held a gun to Powell's head and basically dared Powell not to raise rates any more and to become dovish, lest the rot be exposed again resulting in another economic calamity as a result of Wall St.s newfangled schemes such as absurdly high amounts of leveraged-loans, et al. So, here we go again...

  99. If the economy needs stimulation, then let’s fund some infrastructure improvements.

  100. Ask Europe what it’s like when rates have been lowered so many times that the only option they have is negative interest rates.

  101. I’m sorry. Did the Times Board of Economists reach this conclusion after exhaustively reviewing and analyzing reams of data they commissioned? No! Monetary policy is a technical job that should be undertaken by independent technical experts. It should not be subject to political pressure from the president, popular or press opinion. Let the Fed do its job independently. To put pressure on them one way or another contributed to debase the system.

  102. @Pierre Sogol Actually, they took this position after speaking with world-renown economist President Donald Trump...

  103. @Michael Grove, Funny, but not really. You and the NYT editorial board must have slept your way through Econ 101 class.

  104. No, like everyone else in the world they are caving in to Trump.

  105. History shows that mostly under Republican administrations, the Fed cut interest rates in the last 2 years of an election cycle to increase the likelihood of staying in power. But under Democrat Administrations the Fed raised interest rates in the last 2 years to help defeat Democrats. Note how rates were raised during the last 2 years of President Carter's administration to elect Reagan.

  106. The primary beneficiaries of our low interest rates are (a) Uncle Sam who can borrow astronomic amounts of money without paying anything resembling reasonable interest rates, (b) the stock market which is being artificially propped up because there is no other place to invest, and (c) the housing market. While this goes on, ordinary folks like savers and pensioners are being deprived of a reasonable return on their money. The Romans used to ask cui bono? To whose good? Time to ask that question again instead blowing up the bubble.

  107. It is a horrible fallacy that inflation is barely 2%...just witness the cost of home delivery of the NY Times over the past few years which has risen some 50%. Ours is a service-based economy for the most part, with health care premiums, co-pays, prescription drugs, and a host of other services, such as auto and home insurance, rents, tuition, etc. having risen far, far in excess of 2% on an annual basis. My home insurance costs rose 15% this year after 12% last year, and I've made one small claim (eaten up by the deductible) in 29 years. Insurance companies are required to keep substantial sums in ready cash in order to pay claims. Extremely low interest rates have destroyed their economic model so they are forced to drastically raise premiums in a low interest rate environment in order to make up the shortfall. Wall St. had a violent sell-off in Dec. 2018 and Powell waived the white flag on Jan. 3, 2019. Wall St. in turn has had a six-month rally to all time highs solely due to expectations that interest rates would be cut by the Fed. Yet, the 10-year treasury bond, which the Fed doesn't control, has already done the job of destroying savers hopes for a semi-decent, safe return, having dropped from a still historically low 3.25% in Nov. 2008 to barely 2%. Yet, none of this has helped the vast majority of consumers who still pay upwards of 20% on credit card balances. Why doesn't Powell acknowledge any of this?

  108. @marty If you want to understand what is going on, It's been the relentless shifting of costs to workers and consumers. Whether it is your excellent example of insurance companies preserving their profits by raising rates or the insane increases of college tuition, exponential growth of health costs, or the usurious rates on credit cards, it always ends up coming out of the pocket of Joe Public, Meanwhile, the real dollars paid to workers have not increased significantly in 30 years or more. When will Joe wise up and demand a raise?

  109. Perhaps I misheard something at university during lectures on monetary policy and macro and micro economics and economic history. These terms are not regularly used often to frame political debate. Perhaps they should. The Governor of the Reserve Bank of Australia after cutting interest rates to one percent this month, again suggested that the Reserve Bank Governors whether Australian, American or British cannot determine fiscal policy. Governments decide the flow of money via taxes and expenditure and have effects on the real economy. Reserve Bank Governors are not part of political influence. Cutting interest rates is a sign that politicians have not read their Economic Texts. Cheap money is a bargain basement sell off. The US dollar is devalued by lower interest rates. Perhaps US journalists could preface questions to Mr Trump concerning where the value of the US dollar will fall when interest rates are cut while Wall Street goes crazy. The business of the US is business. I make no remark of Mr Trump's values. Bullying the US Governor of the Reserve Bank has become usual. The bullying is not good for the global economy is not good for business. Corporate America is lacking mojo concerning confronting Trump. Cutting US interest rates is a sign of lack of economic confidence. I hate the reality of recession but it might be prudent to look forward to how we inform future voters how we got them into lower standards of living.

  110. Cutting interest rates to stimulate the economy and create wage growth might have worked in the old, preglobalization days. These days, while it cuts the rate at which corporations and the government can borrow money, and lowers mortgage rates, this no longer has the desired domestic effect. These days, helping corporate bottom lines by lowering borrowing costs only lines the pockets of the already well-to-do, while creating more jobs in China. It no longer does much to increase the domestic money supply, because companies would rather automate or ship jobs elsewhere than raise wages. This is beyond the Fed. Sustaining economic recovery calls for Congress to seriously add to infrastructure and provide real incentives for domestic job creation and manufacturing capacity. Congress has been asleep at the wheel for decades on this issue, because their idea of economic success is measured by the number of billionaire CEOs, which has increased as interest rates have declined. By the way, low interest rates do nothing to help retirees and other savers participate in the economy. But who needs them, right?

  111. If we cut interest rates in relatively good-times, what will we do when the economy eventually deteriorates? The problems of the growing underclass will not be alleviated by cheap money. This did not work out for GW Bush's "Ownership-Society," which helped blow-out the housing market and crashed credit.

  112. I’m torn....while on the surface the economy is good (high markets, low unemployment) which would normally indicate a raise in interest rates, the bond yield has been inverted for seven straight weeks, a strong sign that a recession is looming, which would indicate lowering interest rates. As one other comment or pointed out though, it isn’t the feds job to create continuous boom. The economy is cyclical and the feds job is to ease transitions between those cycles with monetary policy. Legislator’s jobs have a much more direct impact by dictating where money flows.

  113. Cuting interest rates at this point is like cutting Taxes last year. You get a little sugar high and then nothing. Cutting interest at this point is like cutting taxes, a variant of trickle down economics. It does not help the majority of Americans. In another article in this issue a writer bemones multi cities in the USA with median price homes of 1 million dollars or more. You can also bemoan that since the great recession with very low interest rates millioms of homes have been bought up at cheap prices and are now owned by conglomerates that rent them back to average people who can no longer afford to buy them at the high resale prices demanded. With low interests where they are today or were lower before, the governments should be spending billions on infrastructure from roads bridges, better internet in rural areas, better transportation systems in cities etc etc. From FRDR to Eisenhower the 20th century infrastructure of America was created, in science, eduction, electricity and roads. That created the America we knew. A 1/2 point or 1% cut in interest rate will not update an infrastructure that is over 60 years old and out of date. Only a political will will do that. Trickle down economics of tax cuts and and interest cuts will not work for the vast majority of American, left, right or center on the Political scale. There is a global economy now and major corporations are no longer American; but internation. They go where they think they can make the most profit.

  114. The Fed should have reduced rates last fall, not raised them. There’s a 6-12 month lag before decisions are reflected in the economy. The experts at the Fed drive in the rear view mirror. Instead, they should focus on the 6-12 month outlook. If that forecast is too hot or too cold, make the policy change now. Better still, tell everyone what the Fed’s official stance is, so the world can play along with confidence. Or, argue the Fed has it wrong. Fix the policy before it does damage.

  115. My Economics professor likened monetary policy to a rope. It works great as a rope to reduce overactivity keeping us from "Irrational Exuberance". But you can't use a rope to push anything. Easy money could stimulate investment and reducing a 10% rate by half to 5% would be stimulatory for investment. Reducing 2% to 1% is not as stimulatory. Two thirds, 66%, of Our economy is consumption or demand for goods and services. The lower 85% have become more frugal and the lower 50% have had no increase in real wages. There is not much room for growth. The money is in the hands of the Oligarchs who now own the country and control its politics and they are so greedy they want more. But the only other market is the world, Canada, Mexico and China and we are in a trade war with them. Interest rates is like a piece of duct tape over a crack in the engine block.

  116. If companies are struggling with rates as low as they are - and have been - cutting rates again, with the stock market so high, unemployment low & all measures pointing to a strong economy is just denying the inevitable. Debts - private & public - are already at ridiculous levels. All a rate cut will do is artificially inflate stock prices, so when the correction comes, probably later this year, the drop will be larger, the losses greater, the pain increased.

  117. Record debt and deficit, serious trade instability directly related to Trump’s impulsive, unpredictable, “I go with my gut” style of business brinkmanship ( bankruptcy X 6) and no concern by him or GOP regarding the economic burden being foisted upon future generations?? Sure, sounds like a great time to lower already historically low rates and remove one of the only tools to employ when the next, inevitable recession hits. Might make sense if we were doing something with all this “cheap money”, like repair our failing infrastructure, investing in renewables to curtail global warming or preparing Americans for an economy where machines are increasingly replacing people. But we are not.

  118. The authors propose a Fed rate cut based on the false premise that such a rate cut would increase employment and wages. But a cut in the Fed interest rate only puts more money into the economy, and that cheap money all goes to large corporations and big investors. The authors want us to believe again in trickle-down economics, which is just a con. But I guess there's no con like an old con, and a sucker is born every minute. I just returned from three pleasant weeks in northern Scotland, and coming home feels like entering a third-world country. The infrastructure here is literally falling apart.

  119. Fed Chairman Powell did not demonstrate independence yesterday. At this point, he’s just another beaten-down administration lapdog. An intellectually honest and independent Fed chairman would have looked that congressional committee in the eye and said, “That qualified labor problem I mentioned — I don’t have the tools to fix that. All I have is a hammer and what’s needed is a wrench. And that wrench is not monetary policy, it’s fiscal policy which the elected branches of this government wields. To effectively use that tool means sustained investment in education, health care, and infrastructure so that maybe, in a generation, we have a healthy, smart workforce that can effectively get to their jobs from homes they can afford. If I go and lower interest rates all that will result is more money bloating the stock market, which would effectively just make the richest 10% more rich and give the “geniuses” on Wall Street more means to fuel economy-destroying schemes like they did leading up to the Great Recession. So I’m not going to do that. Instead I’ll look to raise rates to keep the proverbial punch bowl away from the investment bankers at least until my term is up, or you, Congress get your act together. Have a nice day.”

  120. Keeping our young under students loans and everyone else under the high cost of healthcare would be a drag on any economy. Do they use the different sectors as tools to fight inflation, because this is what it feels like?

  121. "should demonstrate its independence by cutting interest rates" I'm not sure which is more concerning - that the Fed chair can seemingly being bullied by the White House via tweets or that the US business community is addicted to ultra low interest rates and can't survive without them.

  122. Rates were low, unemployment high and wage growth non-existent. Cutting rates will only increase the numbers people see on their brokerage statements, forgetting that those higher numbers represent dollars that are worth less and less because of the inflation that we are told doesn't exist, but which those without brokerage accounts see with their own eyes at the supermarket and the big box stores.

  123. RE: "Fed officials don’t need to endanger the welfare of American workers to demonstrate their independence." A willingness to hurt people is a key part of Trump's appeal among his base. Well, we've seen enough people hurt for posturing or making a point. There should be no place for gratuitous infliction of harm on people by our government for no reason put to punish them for some difference or perceived slight. RE: "The Federal Reserve should demonstrate its independence by cutting interest rates". However, you said it yourselves. After all Trump's berating of the Fed and Mr. Powell to cut rates any lowering of rates will appear to be anything but demonstrating its independence. RE: "The appearance of bowing to Mr. Trump’s wishes can’t be helped" If the case is strong "that cutting rates is simply the right thing to do" than we (including the Fed) have to say, "President Trump is right on this issue. The Fed has come to the same conclusion as the president in regards to interest rates." We may not agree with his means or tactics or even the reasons why he want to see lower rates, but if it is the right thing to do than saying we agree with Trump at once gives him "a win" and disarms him as the Fed isn't being forced, it is coming to the same conclusion. at once gives him "a win" and somewhate

  124. @Marie -"at once gives him "a win" and somewhate" Sorry, please ignore that. It was a cut and paste that I thought I had discarded before clicking on submit.

  125. I disagree. Inflation is very much present. In the price of housing, prescription drugs, autos and other very necessary purchases. The "basket" used to measure inflation is antiquated. This is all due to having artificially low rates for so long. Monetary inflation IS the very definition of inflation. These low rates punish savers. Savings and investment are the true barometers of growth and prosperity. Americans should try it sometimes. Buying more cheap garbage from China is not a store of wealth. Just ask Japan how having "low rates" has worked out over the last 20 years.

  126. Missing data alert: this article states, "......so its decline obscured the fact that millions of Americans had given up on finding jobs." doesn't match the U6 data from the Bureau of Labor statistics which includes the discouraged worker cohort. https://www.macrotrends.net/1377/u6-unemployment-rate. On the other hand, Powell is correct in saying ".....we don’t really see wages responding.” Once again, the canard that tax cuts for businesses would trickle down to workers is disproved. The real issue is whether a rate cut would reduce the ability of the Fed to respond to the inevitable downturn would be hampered by a rate cut. There is not much room between the current rate and the rates needed during the past recession.

  127. Once more the EB opines on a topic upon it does not comprehend. The economy is strong and does not need to be manipulated to make a political point for the resistance.

  128. @No thank you...see the dozens of comments in the previous article on possible cuts by the Fed...80-90% agree with you...some advocating a slight increase in rates...

  129. If we are cutting interest rates for us, from already low interest rates, what is the justification for still requiring our children to pay back student loans at high interest rates on government loans? Why are so vindictive toward our children when we don't have to be - and it would help them and the economy? If changing times and conditions can be used to justify changing the terms for our economy why cannot changing interest rates be used to justify a change in the rates at which outstanding balances are paid back to us? After all we aren't a commercial bank gleefully rubbing our hands together saying "Ha! Gotcha!", are we?

  130. @Marie Always needed taxes on super rich, especially inheritance taxes to finance repair of infrastructure, healthcare, and education. Probably have some left over to reduce debt.

  131. Monetary policy can only do so much. We are currently in a very low interest environment with the fed funds rate at 2.25%. That's not a lot of wiggle room. Banks are charging huge rates for their credit cards, many way over 20%, which greatly impact consumer spending. Housing prices are skyrocketing and becoming insanely high. Reducing rates will only fuel that advance. The bond yield curve is becoming inverted which is where the 30 year treasury yields less than the 10 year. This is a sign of global economic weakness and a harbinger of recession. The trade wars are slowing down the global economy. We are hurting ourselves as we hurt everyone else. Corporate profits are at all time highs due to the massive corporate tax cuts. Virtually none of that money ended up in workers pockets. Cutting rates will only do the same and push up the stock market. Basically, cutting rates won't have much effect on the economy. The incredible instability, the fear, the chaos, the constant disruptions, the trade wars and threats of trade wars, the threats of shooting wars, the ruination of global alliances and multilateral agreements are doing much, much more damage than any interest rate cut will counter. The left behind will still be left behind except for a few in the resource extraction industries at the expense of the environment. Cuts won't make any difference.

  132. The problem for many of us is that in the main, those of us who have to rely on savings and savings interest (the 47 percent) can’t accumulate enough savings to have a reasonable expectation of retiring before we’re close to 80. Those who can afford to stash extra funds (probably another 47 percent located nearer to the top one percent) in the market don’t rely on savings as savings but as investments. So, they really don’t need to worry when the savings interest is 0.04% instead of 4.0% (Raise your hands if you remember when financial wizards declared not to put money into regular savings accounts that paid "only 5%." Hmm! I thought so.)

  133. "The labor market evidently has room to grow and inflation remains low" My daughter still needs a decent job and the cost of everything that we little people buy seems to grow much faster than the inflation rate used by the government. I am speaking of breakfast cereal, meat, seafood, purchased food items. The $1 bagel is now $2. The $2 slice is now $3. The $3 soup is now $4. And that's not to mention all the things that keep getting smaller like tuna, toilet paper, packages of snacks while the prices go up.

  134. This may be the only op-ed where I seriously question the conclusion and reasoning. Inflation is out there - in the costs that ordinary Americans face, from rent to creeping grocery costs. There have been to predicted increases in costs related to the imposition of tariffs. There has been increased volatility in the stock market - which while not a reflection of the economy - does show the concerns about the flailing about and misdirection of the Presidency. The underlying concern is that his bad decisions could sink the economy for years. I also do not see that for the FED to cut rates - at the behest of the President - is exercising independence. I don't seen that this will provide a bonus to small businesses, and would argue that the big guys have been wallowing in cash anyway -- but extremely reluctant to expand by bringing in an expanded workforce. It's a wrong headed move.

  135. In normal, logical, times, this editorial would make a good deal of sense. But this is not one of those times. Handing Trump another "win", even a false one, hurts the economy more by seeming to agree with the reckless whims of the unschooled president. Trump and the country need the economy that his economic ignorance is creating so is becomes visible and he can be voted out. Trump, like Nixon before him, wants to have the sugar, we need to show him the salt.

  136. With low inflation, the lowest unemployment in decades, and after repeatedly telling Politicians of all stripes to respect the independence of the Fed, the editors now feel it is their position to tell the Fed what to do?

  137. And if Trump had not, last Fall, called the Fed on their robotic "rate raising" behavior : the Fed would have raised rates this past March and no one, not The NYT or its"so brilliant" economist who predicted the worst recession since the Great Depression once Trump was elected, would now be recognizing that the Fed made a major mistake last year by raising rates 4 times with absolutely NO inflation in sight, and no one would be reminding the Fed that they "blew" it and that lowering rates is now overdue !

  138. The Time Editorial Board has damaged its reputation with this weak, even dangerous, argument for a Fed rate cut. Has Trump trumped them too? With even lower interest rates, when the inevitable debacle comes, the rate-cut-tool will dulled and ineffective.

  139. Notwithstanding all this continuous growth, government policy, particularly in tax policy, deregulation, and anti-trust continues to cause ever greater consolidation of capital in the top 0.1 percent of our wealth pyramid. Real wage growth is non-existent, and in fact there is shrinkage in real wages despite low inflation. The obscene tax giveaway of 2017 to the very richest people and corporations did comparatively nothing for the bottom 99%. As one woman was quoted, her tax savings enabled her to renew her an annual membership at Costco, which dumb-as-wood Paul Ryan offered as proof that the tax cuts helped the middle class. Deregulation is permitting ever greater corporate profits while endangering the health and safety of the American people. And the easiest job in the world has to be working for the Antitrust Division; I cannot remember the last time it did anything significant. Never mind too big to fail, let's just consider too big. Bigness by itself is a problem. I'll consider the economy in good shape when everyone has a living wage and can actually save money and when government policy does not enable and encourage robber barons to continue to rob.

  140. Wages are stagnant, because the Internet is the greatest job killing invention in human history. I do so much stuff on the Internet that I hardly need to leave the house. I haven’t been into physical bank in almost 3 years. I renew my car registration each year over the Internet, so I haven’t been to the DMV in over 3 years. I bought new car insurance over the Internet recently without an agent and printed the proof of insurance card. I switched cell phone carriers using the Internet with no human interaction. The computer I’m using was order over the Internet and shipped to me. I download nearly all my music, movies, and books now. I haven’t been to a library in over a year and I didn’t really need to go. They’re obsolete. When I rent DVD’s, I use Redbox. Instructional videos on YouTube have saved me from having to hire mechanics, plumbers, painters, tailors, and general contractors. And I buy nearly everything from linens to electronics from Amazon.com. Gas prices are pretty high, but I hardly need to drive anymore. I used to change my oil 4 times a year. Now, I do one full synthetic oil change a year. There’s this big push towards electric cars, but I see a future where people just don’t drive much. Everything is being sent directly to us. Not to mention, a $100 smartphone replaces a pile of electronic equipment from 30 years ago. This is all reshaping our economy and I think the Fed should proceed cautiously whatever it does.

  141. The Fed shouldn't do anything. The economy is not behaving according to Keynesian economic theory. We have an inverted Phillips curve and long-term treasury bonds are cheap despite a growing economy. That's bad. Tinkering with interest rates as the potential to mess things up even worse. No one really understands what is going on and why. Leave it alone. One theory postulates global market forces are generating white noise in our traditional ideas about normal economic behavior. That's certainly possible. However, I'll contribute we are probably confused because the United States effectively operates in dual economic spheres. Think of a Venn Diagram. One circle is labor. The other circle is the investment and business class. They coexist but they are operating in different economic realities. Call it the quantum physics of Keynesian thought. Interest rates are one of the few places where the two worlds intersect. Ask yourself this: Is encouraging inflation wise when wages aren't responding to economic growth? My guess is you're going to see what we've seen for 4 decades. Higher prices, higher profit margins, but a decrease in real wages. Meaning wages aren't the true driver of inflation anymore. We then need to ask the big scary question: What is? The investment world only responds to interest rates when they go up. Meanwhile, the government can't crowd-out because we're absolutely swimming in underutilized private cash. The Fed doing nothing sounds like a good idea.

  142. This is an interesting allegation; however, the longest uninterrupted job growth is due to the Great Recession: a good part of that "uninterrupted growth" is recuperating the previous levels of employment. The FED does not need to cut the interest rate by a fraction of one percent "to send a message" to the scared "entrepreneurs"; it is clear what the FED does. Cutting the rate will deprive the FED of one of its tools in case of another recession: No where to cut, probably leaving us like the Japanese economy: paralyzed for years. Bowing to Trump is a bad idea: all would be dictators and dictators want to control their central banks.

  143. Missing from this analysis is the reality that a significant portion of the labor force is employed in jobs that offer low pay, no benefits and limited hours--as a wide swath of employers have moved to a business model where much of their work is done by workers they classify as "part-time." Cutting interest rates by a quarter of a percentage point isn't going to alter that reality.

  144. This editorial suggests that the Fed is like the driver of a car: to go faster, step on the accelerator, to go slower, step on the brake, very simple. But, there are some who think the pace of the economy depends on many factors, the interest rates set by the Fed being only one. How much do those interest rates actually affect the economy ? Who knows ? Maybe only a tiny bit, especially when they are already very low. If the Fed's actions measurably affect the economy, the Fed's leadership, Bernanke and Yellen, has stood us well, keeping major recessions at bay (only the bankers and financiers have led us to the brink of catastrophe). We don't know how much Bernanke and Yellen were affected by politics but their measured demeanor gave us much more confidence, than the rantings of amateurs, like the NY Times editorial board. We hope the current Fed relies on its expertise, and not the current political climate.

  145. This is so, so wrong-headed..... It's the tax cut that's the problem..... The rich are inflating the stock market and asset values with their windfall, while bad policy (no infrastructure investment) is holding back real, good-wage growth. Why support that nonsense? Instead, it's time to get serious about creating a real economy based on good jobs, support for education and health care, and environmental investment.... Rate cuts ? Just another sop to the rich, and a means to push home prices even higher. STOP !!!!

  146. It is a rather curious thing to witness the NYTimes Editorial Board writing an opinion piece that agrees with Donald Trump. Forgive me, then, for being skeptical, but my gut tells me that cutting rates at the top of the market, before the bubble bursts, seems like a foolish idea, but one that the big banks, who hold influence over both the Mr Trump and the Times, would be more than happy to take advantage of.

  147. This editorial is based on false assumptions. Cutting interest rates will mainly help inflate stock prices that the wealthy would like and not help the "real" economy or small savers.

  148. Lowering interest rates tells Trump, "Not to worry, Chief! You play your 'house of cards' any way you like. We'll try to make you look good no matter how many crazy decisions you make." This is why he Trump chose to surround himself with gaggles of grifters. Yet, I really thought Chairman Powell had more spine than this. This is not a time to capitulate to Trump's spontaneous examples of what he DIDN'T learn at Wharton. Trump has one mindset: break stuff then, fix it with his name on it to extend his now beleagured brand. So, instead of rushing to reduce interest rates while the economy is soaring (thanks to Obama's policies), because this will simply overheat the economy requiring another rush to INCREASE interest rates, Mr. Powell should continue to monitor the state of the economy, something Bernanke failed to do before announcing, with Hank Paulson at his side, the economy's failure in the fall of 2008.

  149. Worst opinion by the Times board that I’ve ever read. Basically saying that the FED should bow down to the wishes of Trump to continue to feed a stock market and debt frenzy that benefits the rich at the expense of conservative savers and pensioners. Yes let’s go down the path of endless ( and negative) rate cuts that Japan has been stuck in for decades and now Europe is following. Did their economy a world of good. Let the FED continue to supply the markets and corporations with endless supply of money so that the rampant speculation and borrowing can go on.

  150. The only thing such a cut might do is help delay the inevitably coming recession till after the election, assuring Trump’s victory. Rates are still extremely low by historical standards and cuts should wait till growth falters, lest we have no fuel left in the tank. Your Ed board lacks anyone with a basic understanding of monetary policy or economic history. Shameful.

  151. Trump's threat to demote Powell should he not lower rates and then Powell's acquiescence to Trump resulted in my credit union lowering their 5 year CD rate from 3.51 to 2.71 in little over 2 months. On a fresh 10K deposit, I will loose $80/year. Time to start looking to economize. I will start by cancelling my NY Times subscription of $15/month. See how trickle down works?

  152. Real interest rates are extremely low. They aren't impeding lending or growth. Lowering rates is one less tool in the feds box if things go south. One other thing you can be sure of. When all sides of a trade are on one side of it, it's going in the other direction. Articles like this along with the President jawboning lowering rates is a contrarian sign that inflation is about to enter the economy.

  153. The Fed is not supposed to run the economy. Remember who pays for lower interest rates - yes that’s correct if you said savers.

  154. We're in no man's land at the moment. Too risky to still be heavily exposed to the stock and real estate market and interest rates are low. I would rather see the fed save its powder for when it's really needed. There is not a lot of room for a soft landing.

  155. What a laughably naive, short-sighted and harmful "analysis." Manipulating the price of money always comes home to roost in the form of malinvestment bubbles (which have characterized the last 3 market cycles thanks to increasingly deranged operations). We've already had close to 10 years of LIRP/ZIRP, the bubble and inevitable crash is already baked in the cake at this point. Easing in advance will only destabilize the foundation for the next market cycle.

  156. The dual mandate to the Fed that causes it to toy with interest rates to affect employment rates makes its policies ineffectual for either purpose. Fiscal policy is the province of Congress. The Fed cannot compensate for the monstrous chronic ineptitude of Congress at fiscal policy with monetary policy.

  157. Time for Trump to stop telling the Fed what to do. As for interest rates, they're so low already there's not much left to cut. I'm a saver and the interest rate earned in my savings account amounts to less than one-thousandth of a percent, by to my calculation.

  158. Anyone who believes the gubbamint's inflation figures has never shopped for groceries, bought a house, rented an apartment, or paid utility bills. Oh -- we exclude food and energy from the formula to calculate inflation, since nobody uses food or energy. Interest rates should be raised, if for no other reason than to end the decade-long war on senior citizens and savers.

  159. It should be about creating good jobs that allow people to make a decent living, not just volume to bring down the unemployment rates.

  160. The lack of economic awareness in this article is saddening at best and dangerous at worst, if it convinces some readers of the point it's trying to make. Interest rates are already low, and cutting interest rates is a tool saved for re-heating the economy. Why would you run the heat in your apartment when it's already at 90, you're almost out of oil, and "winter is coming"? "Most of all, the argument for a rate cut is that the Fed should try to extend this economic expansion, which is now the longest period of uninterrupted growth in American history." What?? The strongest argument for cutting rates is an anecdotal and emotional "Let's keep this baby going!"? No thanks.

  161. We are no longer a society of producers, but one of consumers. There is a large swath of the population who are still bruised and battered and well remember the Great Recession, including those of us who lost our jobs for years when we were only in our 50s and were unable to replace that lost income and retirement savings. The jobs we were finally able to get were at a much lower wage. Interest rate cuts are of little interest and in fact, a little inflation is a good thing. Maybe then my social security check will keep pace with the increases in my Medicare contribution and supplemental health insurance. So thanks, I'll hold on to what little money I have and not consume stuff while the brains in Washington run the economy into the ground once more, probably in my 7th decade of life.

  162. Apparently the NYT's memory is very short and selective about presidents who have tried to influence the Fed. Historians recognize that virtually every president has wanted to influence the Fed. It is just that with social media today we are much more aware. Johnson physically threatened Martin. Hoover threatened the Fed to try and save his presidency. Truman had major battles with the Fed to get them to do what he wanted. Kennedy did as well. It was only starting with Clinton and through Obama (that includes Bush) that there was more restraint by presidents.