As the Federal Reserve’s policymaking Federal Open Market Committee (FOMC) readies itself for its next meeting this week, a new consumer survey
conducted by WalletHub finds more than three-quarters of Americans favor having the Fed cut rates.
In a survey of 1,086 people, 76 percent of respondents supported a Fed rate cut, with 66 percent stating current interest rates on loans were too high, 76 percent said their credit card interest rates are too high. and 68 percent insisting a rate cut would be good for their financial well-being. While respondents gave the Fed more credit for knowing how to grow the economy than President Trump by a two-to-one margin, 73 percent of respondents said the President is correct in calling on the Fed to cut rates.
“The Fed probably won’t cut its target rate at its June meeting,” said WalletHub CEO Odysseas Papadimitriou. “But future pricing indicates we’re almost certain to see a rate reduction this summer or early fall. The Fed has more economic data than anyone, so if they are simply reacting to market conditions, there’s no reason to question them at this point.”
Nonetheless, Papadimitriou warned that any rate cut should be seen as kowtowing to President Trump.
“However, the Fed must make it very clear that the move is not politically motivated,” he continued. “President Trump’s public statements have made it abundantly clear that he wants interest rates to go down, not up, because he wants to prolong the economic expansion through re-election. However, Fed Chair Jerome Powell has also made it clear that he fully understands the independent authority of his office. It is hard to say which of those two opposing forces is winning out right now.”
Papadimitriou also observed that a rate cut would benefit “people with credit card debt, who WalletHub projects will save roughly $1.6 billion on interest. If reducing rates delays the next recession, it would help all of us by giving us some extra time to save up for leaner times. Plus, a drop in rates would put American businesses and consumers in a better position to withstand an escalation in the trade war with China.”