The United States Federal Reserve convened this week on their decision to lower the national interest rates by a quarter of a percent. This discussion has been going on for at least a year now, as President Donald Trump was always campaigning for the cut.
The opinions of experts on the matter are pretty much cut right in the middle. Some fear that this was a desperate attempt to avoid an upcoming recession, while others believe that it was a decision made to boost the economy in the future.
Slowing economic growth has been a constant occurrence in the world, but many say that there’s only so much a country’s economy can experience this growth until it comes to a complete stand-still.
But it’s been said that countries are like sharks if they stop moving they are going to eventually die due to poor economic circulation.
What will the rate cut entail?
The federal interest rate cut is likely to tumble the USD a little bit in the mid-term. Although it actually helped it appreciate a little bit for the short term, having such a sentiment come from such an important financial institution in the US is sure to ruffle some feathers with speculators.
The rate cuts are going to allow US consumers to have better access to state and commercial loans, which could potentially translate either into better and more investments in the future, or overall better consumer spending in the United States.
As statistics show, consumer spending has been going on the low-end for the past couple of years while companies have miraculously been growing without an end in sight.
This is nothing but an economic bubble in the making. Soon enough the USD’s strength would have reached trade deficits to a point where the government wouldn’t be able to retain it anymore, and the population would simply not have enough funds to access most of the country’s goods.
Companies would lose a large majority of their customer base and fail to maintain the growth pattern that investors have started to become accustomed to. Such a sudden change in the economic reality would introduce something similar to 2008, from which the world is still recovering.