Why Trump will have a hard time cutting interest rates – Fixie News

Why Trump will have a hard time cutting interest rates

The president and the financial markets are hoping and begging for an interest rate cut this year. What are the chances of that happening?

They’re low, unless the Fed needs to come to the rescue of a disastrous stock market plunge.

What would cause the stock market to plunge? An escalation of the China trade war and/or more political chaos in Washington are the two most likely sources of trouble.

Based on how the economy is doing, which, right now, is good, there’s no chance of the Fed lowering rates. And a few Fed presidents played bad cop/badder cop last week when the tariff issue was distracting investors from the issue of interest rates.

Patrick Harker, president of the Philadelphia Federal Reserve, said what nobody on Wall Street wanted to hear: He is still expecting one more interest rate hike by the central bank this year and another one in 2020.

Those remarks came during a speech a week ago today.

That same day, Fed Vice Chairman Richard Clarida told Bloomberg TV that he doesn’t see a strong case to move interest rates either up or down. That comment pretty much parrots what Fed chairman Jerome Powell has said for months in his official remarks.

Also last Tuesday, St. Louis Fed president James Bullard said that it isn’t time yet to consider lowering interest rates.

You might notice a pattern here. The stock market certainly did. The Dow Jones industrial average fell more than 450 points on the day these comments were made.

Most of us blamed the stock market’s decline last week on the fact that tensions in the trade war with China had escalated and President Trump was about to raise tariffs on Chinese goods coming into the US.

That was only part of it. The comments by the Fed officials was the other part.

Show us the cash!

That’s what millennials — Americans ages 23 to 38 — want as a reward for signing up for a credit card.

According to a survey by CreditCards.com, 36 percent of this group of big spenders prefers a $500 cash bonus or $1,200 in travel credit when they give in to the persistent offers from card companies.

That’s because they’re young.

At age 39 or older, 30 percent says zero-percent interest rate offers are preferred. Only 17 percent of millennials find that attractive.

The best deal of all? Thirty-one percent of all Americans say that three percent cash back on all purchases is best; 17 percent want $500 cash and 11 percent want travel vouchers.

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