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Will Another Rate Cut Really Help?
-- October 17, 2001
Many Wall Street economists are salivating over the possibility of another rate cut when the Fed meets in early November. But is another rate cut really going to lift the economy out of the current recession? No way.
The barrage of Fed rate cuts since the beginning of the year has made little difference in turning around this weakened economy. And the combination of rate cuts and tax cuts that was supposed to be a one-two punch to combat recession seems to have failed miserably.
Greenspan noted in his remarks today that taxpayers have spent only a small portion of their refunds. And now the nation is even more cautious -- in light of the September 11th attacks and the current war on terrorism. We don't expect consumer spending to bounce back quickly. And without consumers, the economy is not going to rebound.
So, even though economists may get their wish for yet another rate cut on November 6, we don't think it will be the cure-all they're hoping for.
Fed: Economic Impact Still Unknown