Fed Is Cutting Interest Rates and Here’s Why

fed is cutting interest rates and here's why

The US economy might currently seem to be in the best position because of the high growth rate and low unemployment rates, which trump government has managed to achieve, but deep down lies the trouble. Feds have decided on Oct 30 to cut interest rates for the third time in a row, which is making many financial advisors worried about the current economic situation. The US government is doing its job by expanding to various sectors and taking the whole economy upwards. There are even some reports which show that Trump administration managed to achieve that success, which was not produced by even the Obama government. Even though rising growth rates and declining unemployment might look excellent overall, but there’s a reason why the fed is trying to cut interest rates. The primary goal is trade war tension, which Trump has initiated with so many countries. China, which is one of the most significant nations in the world, is already facing a trade war with the USA. Because of such a geopolitical situation, many major industries are not performing up to expectations.

America’s farmers, consumers, and companies are losing millions of dollars because of such trade war. Now that’s why the fed has to keep the interest rates low to increase the bargaining power of consumers. According to economists, a country that is performing relatively well shall not cut interest rates since it would create significant economic problems. However, as of now, the USA is doing the exact thing, and investors are worried about its long term effects. Fed has given corporate loans to big companies, which has now turned into a corporate bubble. The corporate debt is now nearly $15.5 trillion, which is enough to bring another great recession over the whole country. However, fed might have to take such bold steps until the government stops a trade war with other countries and focus more on domestic issues.

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