NCPA - National Center for Policy Analysis

Should The Fed Lighten Up?

August 28, 1998

Some financial market experts think it's time the Federal Reserve cut interest rates to help ease deflationary pressures affecting a number of foreign economies. Here's their thinking:

  • There's little chance of inflation in the U.S., so keeping interest rates high here could be throttling the ever-growing economy.
  • Better growth here would cause us to buy more exports, thus giving troubled overseas economies a shot in the arm.
  • Keeping the dollar -- the unofficial world currency -- too strong means making the world's money troubles worse.

Now, what one expert calls "Russia melting down on top of Asian flu," may finally give the Fed a reason to lower interest rates. But at its August 18 meeting, the Fed Open Market Committee voted to leave rates unchanged and, some sources say, even considered raising them.

Source: Anna Bray Duff, "Is The Fed Dropping The Ball?" Investor's Business Daily, August 28, 1998.


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