The Fed Has Reached a Turning Point
Its interest-rate decision next week may signal a new direction. People need to be aware of the risks.
Lower rates and look out.
Photographer: Win McNamee/Getty ImagesThe U.S. Federal Reserve is poised to put interest rates on a new, downward trajectory in its efforts to support an increasingly fragile economy. The move is long overdue, but it’s crucial that officials and the public recognize the risks.
Although Fed officials meet at least eight times a year to deliberate over monetary policy, they change the direction of interest rates much less frequently. The past fifteen years can be divided into three distinct phases (with a few short “wait and see” gaps): tightening from June 2004 through August 2006, easing from September 2007 through December 2012, and tightening again from June 2013 to December 2018. The Fed didn’t move at every meeting in these periods, but the overall tilt of policy was clear.