What I’m talking about here is the federal funds interest rate.
Simply put, in the United States, the federal funds rate is the interest rate at which banks and credit unions get money from the Federal Reserve.
The lower the fed rate is, the lower the rate that businesses and consumers pay when they borrow money.
The lower the fed rate is, the lower the rate is that we earn on CDs, Savings accounts, etc.
The federal funds target interest rate is determined by a meeting of the members of the Federal Open Market Committee (FMOC) which normally occurs eight times a year, or about every seven weeks.
The FOMC consists of twelve members, the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.
As of September 2018, the target range for the Federal Funds Rate is 2.00–2.25%. This represents the EIGHTH increase in the target rate since tightening began in December 2015 (only a month after President Trump was elected). Obama never experienced even ONE increase.
The last full cycle of rate increases occurred between June 2004 and June 2006 as rates steadily rose from 1.00% to 5.25%. This occurred during the presidency of Republican President George W. Bush.
The Federal Reserve then began lowering rates in September 2007. Between September 2007 and December 2008 the target rate fell from 5.25% to a range of 0.00–0.25%, the lowest rate in the Federal Reserve’s history. This occurred as Democrat President Barack Obama took office and the rate remained at 0.25 or less his remaining 7 years in office.
So Obama’s economy basically enjoyed 7-8 years of “free money” from the government and still could not pick itself off of the floor.
Additionally, I find it peculiar that “The Fed” NEVER chose to increase its rate under democrat president Obama, but increased the rates on a regular basis under republican presidents, Bush and Trump.
There are two ways to react to this. Either we had rate increases under presidents Bush and Trump because their economies were more successful and warranted them (which Obama would argue is not the case), or, the individuals at “The Fed” are a biased group that did all that they could do (rates of 0.0%) to prop up the Obama economy.
I suspect it’s a little of both, but it is annoying when we hear former President Obama take any credit for President Trump’s economy, when the Obama economy could not generate enough steam to even get the Fed’s rate off of ZERO PERCENT.
Of course, the “biased fake news media” has chosen to report and emphasize the negative aspect of the story here (higher interest rates for consumers) rather than report on the general overwhelming success of our economy. It is very apparent now that they are just unwilling to give President Trump ANY credit for anything that could be perceived as positive.
CNN Business News or all the people out there crying because they are currently paying the outrageous rate of 5.0% on a home loan are not going to get any sympathy from me. When my wife and I got our first home loan the rates were between 11.0% and 13.0%! And they had been higher than that!
President Trump has said he is concerned and mad about rising interest rates. He’s worried The Fed is raising interest rates too fast, in a way that will unnecessarily slow the economy, because they’re concerned about a “phantom inflation threat.”
All in all, I guess these are good concerns and good problems to have.
President Obama never had to worry about his economy being slowed down.
If it would have been slowed down any more it would have going in reverse!
NOTE: If you’re not already “following” me and you liked my blog today, please scroll down to the bottom of the page and click the “Follow” button. That’ll keep you up to date on my latest posts.
Thank you, MrEricksonRules.
Leave a Reply