Donald Trump Has Already Gotten the Interest Rate Cut He Wants

NOTE: Shortly after I wrote this post, the Fed cut rates by half a point. Sometimes whining works.

Donald Trump is whining on Twitter yet again that the Federal Reserve is keeping short-term interest rates too high. He’s been beating this drum for a while, so obviously it has nothing to do with the coronavirus. It’s solely because Trump wants the economy to be as strong as possible while he’s seeking reelection.

Putting that aside, it would probably be a good idea for the Fed to loosen a bit anyway. It’s low-risk insurance. At the same time, the thing we (and Trump) should really care about is long-term interest rates, since that’s what affects economic growth the most. In fact, the primary purpose of lowering short-term interest rates—which the Fed controls—is to nudge down long-term rates—which the Fed doesn’t control. But as it turns out, that’s already happened:

Over the past year long-term rates have gone down about 1.5 points. In just the last month they’ve gone down half a point. They are currently at levels below anything Barack Obama enjoyed.

I doubt that Trump knows this, but he’s already gotten the benefit of a huge reduction in the interest rates that really matter. He should quit griping.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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