1. With the cut in rates by Fed, consumers earn less interest on their savings. Bank usually lower rates of savings account and current deposit account. The rate cut takes time to be reflected in bank rates. When the Fed cut interest rates several times, it works great for stocks. The decision to cut rates was to provide some insurance against ongoing risks.
2. The beneficiaries of this move by the Fed are:
Borrowers - The cut in interest rates will benefit credit card holders carying large credit balances as it will help their payments from rising further.
Homebuyers and Homeowners - A cut in interest rate benefits buyers for their home buying. It is also an opportunity for people who have home and are looking for refinancing.
Stock Investors - Lower rates can make borrowers buy stocks as investment. Stocks paying high dividends can get big boom from low rates as they are seen attractive.
3. A rate cut could hurt savers with high yield accounts
The federal funds rate is used as a benchmark for many consumer interest rates. Savers can expect CD rates to fall with the Fed decision. Saving account interest rate will also fall. Some banks cut yield on some of their retail products. This way it hurt savers with high yield accounts.
4. Fed should cease its intervention because it increases the money supply, diminishes the purchasing power of our currency, disturbes the proper market strategy of boom and bust period and allows the federal government to grow without taxing the American people.
The Federal Reserve cut interest rates several times in 2019. What has been the result of...
The Federal Reserve cut interest rates several times in 2019. What has been the result of this policy action? Who are the beneficiaries of this move by the Fed? Who has been hurt? Should the Fed cease its intervention?
The Federal Reserve cut the federal funds rate in July 2019 for the first time since 2008. Though it's important, it doesn't mean the interest rate on your car loan will be lower tomorrow. Check out the article from the New York Times that explains how common interest rates for consumers will be affected by the Fed's action: Which of these will likely affect you the most? Will you benefit from the rate cut? Or will you be hurt by...
In July 2019 the Federal Reserve lowered interest rates for the first time in a decade. The Federal Reserve has two missions: to keep unemployment low and to keep inflation low. To reduce the unemployment rate, it cuts rates to increase the money supply and increase aggregate demand. To reduce inflation the Fed raises interest rates to decrease the money supply and tamp down aggregate demand. Right now the unemployment rate is at a 50-year low and inflation is below...
Over the past several years, the Federal Reserve has kept interest rates very low. Discuss the policy the Federal Reserve is following and the reasons for this policy given the conditions in the economy. Discuss the risks of keeping interest rates very low. Explain the effect low interest rates have on the economy.
Macroeconomic 1. Over the past several years, the Federal Reserve has kept interest rates very low. Discuss the policy the Federal Reserve is following and the reasons for this policy given the conditions in the economy. 2.Discuss the risks of keeping interest rates very low. 3.Explain the affect low interest rates have on the economy.
Federal Reserve Chairman Jerome Powell announced the central bank will lower interest rates for the first time since the Great Recession in 2008 to help stave off the possibility of an economic downturn. Federal Reserve Chairman Jerome Powell announced the Fed will lower its target federal funds interest rate by 25 basis points to a range of 2.0% to 2.25%. Powell stated the Fed still viewed the outlook for the U.S. economy as favorable, but the interest rate cut is...
Macroeconomic factors that influence Interest rate levelsApart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity-influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: StatementsTrueFalseActions that lower short-term interest rates will always lower long-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in...
The Federal Reserve cut rates half a percent on tuesday. What does this do to the IS-LM curve?
When it wants to change interest rates, the Federal Reserve (Fed) buys or sells government securities, which is referred to as open market operations. If the Fed wants to decrease interest rates, it should ________ government securities. a. buy n. neither buy or sell c. sell d. decrease the taxes investors pay on their investments
Book Principals of Finance question 17-3 Explain how the Federal Reserve manages to monetary policy of the United States. If the economy was in a recession characterized by high interest rates, what actions might the Fed take to exert downward pressure on those interest rates?