As Congress and the White House negotiate a temporary growth package to aid our economy, the Federal Reserve has made a move signaling trepidation about future growth and stagnation by cutting the federal funds rate by .75 points. The bold move made before next week’s meeting marks the biggest reduction for this rate since 1990 and the first time the Fed has changed rates between meetings in several years.
Seeing how the Fed is not prone to acting in such a fashion without relevant and strong indicators showing action is needed, cutting rates by half a percentage point, let alone three-fourths of a point, underscores the urgency of the situation.
The Congress and White House, Democrats and Republicans, must follow-up on this cut with prudence and astute judgment so as to have the biggest positive impact. As the global economic engine loses strength the decisions we make can be felt for some time to come.