As we all saw on Wednesday, the Federal Reserve made equal 25 basis point cuts to the Federal Funds Rate and the Discount Rate. While we are happy that core inflation is not going to be a large problem with this rate cut, and that we are easing rates in a growing economy where we just saw the U.S. economy grow at an annualized growth rate of 3.9%, I believe that many other problems will arise.
While lowering rates will bring along a lower borrowing cost I do not think that our economy needs this. Doing this will only bring people to spend more money on things they do not need. As we saw already companies that sold necessities like The Procter & Gamble Company(NYSE:PG) and Johnson & Johnson(NYSE:JNJ) have both been doing well though the subprime market problems.
Lowering rates now will also…
