Dem
47
GOP
53
Donald Trump loves low interest rates, as they are good for the real estate business. Yesterday, the Fed cut interest rates by a quarter of a point and suggested another quarter-point cut is likely before the end of next year. This should make Trump happy.
However, interest rate cuts often rev up inflation. Given how much voters are complaining about affordability, these cuts could backfire on Trump by raising prices. Fed Chairman Jerome Powell held a news conference yesterday and said: "We are well positioned to wait and see how the economy evolves from here."
The new benchmark rate is in the range of 3.5% to 3.75%. Lower interest rates affect different people differently. People with variable mortgages feel lower rates quickly when their monthly payment drops. People with a lot of credit card debt also get a break when rates go down. But seniors who have a lot of money in savings accounts and depend on the interest to live on definitely do not like rate cuts.
Generally, low interest rates help the stock market because if savings accounts don't pay much, stocks look like a better deal. Indeed, the Dow Jones was up 1.05% yesterday to a near record of 48,058. Donald Trump tends to use the stock market as a measure of how good he is doing. People with a lot of their assets in the market may agree, but a large fraction of the population owns no stocks, directly or indirectly, and thus does not profit from a market surge. (V)