In this economy, what do you think the Fed should do to the federal funds interest rate and why??

Question

In this economy, what do you think the Fed should do to the federal funds interest rate and why??

Answer 1

I think stability followed by a slow rise.  Normally the way to react to recessions is by lowering rates, but now most of the pain is from rising fuel prices, which are caused at least partially by a weak dollar, which is at least partially caused by low and dropping interest rates.

The banking crisis is nearing its end.  Time to work on the inflation crisis.

Answer 2

Keep it stagnant, for now.  The Fed has dropped the rate quickly, but hasn't left itself much room to work with.  The Fed should wait another six months to see how the economy is shaping up before considering cutting rates again.  Otherwise, we risk taking away our ability to react, since we can't realistically drop rates below 0.0%.

Answer 3

I suppose lower.  Then lower the reserve requirement.  Which raises the money multiplier.  More money into the economy= increased demand.  Increased demand= more jobs.  More jobs=lower unemployment.