Federal Reserve Drops Interest Rates

In an attempt at stabilizing the US markets amidst the growing fears of the coronavirus, the Federal Reserve announced an impulsive interest rate cut by half a percentage point, bringing the new range to 1%-1.25%. This cut was the first in this range since the 2008 financial crisis and in the press conference announcing the adjustment, Federal Reserve Chairman Jerome Powell assured that the rate cut will provide a “meaningful boost to the economy.”

CNBC wrote “The committee obviously decided not to wait for things to deteriorate — I think they know as we all should that the headlines over the next few days are likely to be alarming as they pertain to the spread of the virus,” said Eric Winograd, an economist at Alliance Bernstein. “The Fed obviously cannot address the virus itself by cutting rates, but they can hope to short circuit the potential for a negative response in financial markets that could make the economic impact of the virus even worse.”

As we addressed following the previous interest rate cuts, this affects consumers in a myriad of ways. For some, this could be a great reason to explore refinancing a home or take advantage of a lower interest rate compounding on credit card debt. For others, a rate cut could mean earning less interest on savings or money market accounts. For the US economy as a whole, a rate cut generally produces more flow of capital and encourages consumer spending, a wholesome fool-proven tactic in promoting global economic growth. Time will tell; however, as your trusted advisors, we feel confident in our approach of leveraging long term strategies but understand you may have questions or concerns with all the media surrounding the markets right now, and are always happy to sit down and discuss in more depth.

For further information please email: Info@Nashvillepwm.com