The Fed has cut interest rates again, reducing its key rate to 2 percent — a real interest rate of less than zero, after taking into account inflation. It will be about as ineffective (in stimulating the economy) as pushing on a string. But it will trigger renewed inflationary pressures. International investors are already disgusted with the Fed’s inflationary attempts to bail out borrowers by chopping interest rates, and this will make them even more reluctant to invest in the U.S.
Categorized | Economy, International, Precaution & Risk
Fed Cuts Interest Rates, Triggering More Inflationary Pressures
by Hans Bader
April 30, 2008 @ 7:09 pm
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