The Federal Reserve isn’t likely to cut interest rates again any time soon, according to the minutes of its most recent policy meeting.
In late October, the Fed cut its benchmark rate for the third time this year, lowering the rate to a range of 1.5% to 1.75%. Most members of the Federal Open Market Committee felt the three cuts were enough “to support the outlook of moderate growth, a strong labor market, and inflation near the Committee’s symmetric 2 percent objective,” the minutes said.
President Donald Trump has been vocal in his criticism of the Federal Reserve, saying repeatedly that the central bank hasn’t cut rates drastically enough. The president has even called repeatedly for the Fed to lower interest rates below 0% – a policy that some other countries have tried, with mixed results.
“We are actively competing with nations who openly cut interest rates so that now may are actually getting paid when they pay off their loans, known as negative interest,” Trump said in a speech in New York earlier this month. “Give me some of that money. I want some of that money. Our Federal Reserve won’t let us do it. It puts us at a competitive disadvantage to other countries.”
Despite Trump’s stance, FOMC officials were united in their opposition to employing negative interest rates.
“The staff noted that although the evidence so far suggested that this tool had provided accommodation in jurisdictions where it had been employed, there were also indications of possible adverse side effects,” the minutes said. “Moreover, differences between the U.S. financial system and the financial systems of those jurisdictions suggested that the foreign experience may not provide a useful guide in assessing whether negative rates would be effective in the United States.”
FOMC officials worried that “negative interest rates would entail risks of introducing significant complexity or distortions to the financial system,” the minutes said.