The Federal Reserve lowered interest rates on Tuesday for the first time since the Great Recession of 2008.
The nation’s central bank voted 8-2 to cut rates by a quarter point, which brings interest rates to a range of 2% to 2.25%.
While the U.S. economy continues its record-breaking expansion with inflation and unemployment rates at relatively suitable levels, slower growth in global markets may have motivated the Federal Reserve to lower interest rates as a precaution.
Economics professor Tassos Malliaris of Loyola University fears the Fed may have buckled to public pressure from President Donald Trump to lower rates after increasing them last year.
“I’m old enough to remember, the Federal Reserve for the past 50 years is focused on unemployment and inflation – the dollar is for the Treasury Department,” Malliaris said. “In the tradition of the Fed, you don’t want a very powerful institution to be flip-flopping all the time.”
Michael Miller, associate economics professor at DePaul University, doesn’t think the Fed is concerned with the value of the dollar in relation to other international currencies.
“I know it’s going to look that way – I think we have a case of correlation versus causation,” Miller said. “I don’t see a political side to this at all. I think this is purely in relation to economic conditions: Europe is starting to soften, Japan is softening, China is softening – all these world economies are softening.”
Malliaris and Miller join us to discuss the Federal Reserve’s latest move.