OK, the title is a little misleading. The cutting remarks I'm referring to aren't the ones that professional wrestlers hurl at one another before grappling on the WWE. I'm talking about the ones the Federal Reserve (more specifically, the FOMC) are in charge of implementing. Recently there have been some remarks that seem to indicate a darned-near 100% chance of at least a .25% rate cut, and a 50% shot of a half percent rate cut. That's great right? After 3 cuts in the past 3 FED meetings (totaling 1.00%), I've gotta say I'm a little concerned.
Here's why. Yes, rate cuts are good for our slowing economy. Cheaper money, means more spending. But FED rate cuts aren't always a good thing. First off, they usually force interest rates higher. Weird huh? Second, they can encourage inflation. Not good. I don't want to have a better rate on my equity line, but be paying $32 for a loaf of bread and $120,000 for my SUV that guzzles $12 a gallon gas.
So what's the FED to do? What should they do? Keep chopping away at the Fed Funds Rate and hope the tree doesn't fall on them? I'm sure Manatee County is the same as any other place, the average person would rather have money in their pocket now and worry about inflation later. But it still begs the question: To cut, or not to cut? What do you think?
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